COMPENSATING WAGE DIFFERENTIALS FOR WORKERS WITH HETEROGENEOUS PREFERENCES: EVIDENCES FOR BRAZIL

Abstract

This paper studies how heterogeneous preferences for risky jobs, captured
by smoking, are related to the trade-off involving wage-risk relationship. To reach this
goal, the theoretical model developed by Viscusi e Hersch (2001) is tested for the Brazilian case from the data of the Special Smoking Survey (PETab) included in the National
Survey by Household Sample (PNAD) 2008 (IBGE, 2009) and Yearbook Statistics of
Job Injuries (AEAT) 2008 (MPS, 2009). Estimates are made by empirical models conditioned for the mean and quantile controling for problems of sample selection bias and
endogeneity. The results show that smokers receive a lower risk premium than nonsmokers in economic activities with higher incidence of nonfatal occupational injuries.
According to these estimates, the value of a statistical injury (VSI) per year is, on average, for non-smokers approximately R$ 6,200 per injury and R$ 3,900 for smokers, with differences also in the other quantiles of the conditional wage distribution.