What is the risk for a worker of a fatal accident

Reference no: EM13551550

Two companies require identical skills and training from their workers. Both employ 10,000 people. On average, Safety First has one worker fatality per year, while Safety Second has two worker fatalities per year. Jobs at Safety First pay $50,000/year, while jobs at Safety Second pay $50,500/year.

(a) Why do these jobs with identical requirements pay different salaries, based on the information presented here?

(b) What is the risk for a worker of a fatal accident at each company? What is the pay premium associated with that risk?

(d) Do you expect this value of a statistical life to be appropriate for the population as a whole? Why or why not?

Reference no: EM13551550

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