Wage Compensation for Risk: The Case of Turkey

In this article, I estimate the premium associated with fatal and non-fatal risk within broad industry categories, using official figures provided by the Ministry of Labor and Social Security and wage data from the 2010 and 2011 Household Labor Force Surveys. The results show only positive and significant fatal risk premiums in the manufacturing sector, whereas injury risk premiums exist in both the manufacturing and industry-wide samples. When wage heterogeneity is allowed, fatal risk compensation increases along the distribution, while that of injury risk follows an inverse-u pattern. Compared to similar country cases, the VSL and VSI estimates are relatively small and not significant for low wage earners. Industry averages show that longer working hours are correlated with accidents rates which implies the importance of firm heterogeneity and institutional factors on the high level and variance, particularly for Turkey.