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Compensating Differences in the Canadian Labour Market.

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Abstract

The theory of compensating wage differentials originally developed by Adam Smith has only recently been assessed using labor-market data. This paper examines the relationship between job characteristics and earned income in Canada. The results indicate that workers in risky jobs do, ceteris paribus, receive financial compensation for the hazards they face on the job. This paper also includes a number of "value of life" estimates derived from a hedonic earnings function.

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