Hedonic Wage Equilibrium: Theory, Evidence and Policy

ISBN: 1601983700

Author: Kniesner, Thomas J.

Condition: New

Hedonic Wage Equilibrium examines empirically and theoretically the properties of the equilibrium wage function. Section 1 presents the complete economic structure of the hedonic labor market equilibrium model and considers the possibility of multiple hedonic equilibrium loci for highly distinctive groups of workers such as smokers and nonsmokers and the hedonic locus for desirable workplace attributes. Section 2 describes the precision one can bring to policy evaluations with the hedonic equilibrium locus. The reader interested mainly in learning the fundamentals of hedonic equilibrium can focus on Sections 1 and 2 only. Complementing Section 2, Section 3 describes the special econometric issues involved with estimating the hedonic locus and the underlying structure resulting from worker and firm heterogeneity and the implicit prices of workplace characteristics that are the fundamental ingredients to an hedonic equilibrium econometric model. The reader who is knowledgeable in the theoretical dimension of hedonic equilibrium, but who wants to learn the econometric nuances of the model, can focus on Section 3. Section 4 presents recent empirical results for the hedonic wage equilibrium locus and their implications for policy that use the value of a statistical life (VSL), which is the implicit value workers as a group place on one life. Section 4 is a standalone presentation that may be the primary interest of readers knowledgeable in how to estimate hedonic equilibrium regression models but want to learn some useful recent econometric results. Econometric estimates are not the only way to give empirical content to the hedonic model. In Section 5 we present the empirical alternative of numerical simulation, which may be the focal section for readers well versed in the theory and econometrics but wish to expand their knowledge base to include the technique of computable hedonic equilibrium. Our results show the relative dominance of workers' compensation insurance over occupational safety and health regulations in improving workplace safety. Section 6 presents the conclusions.