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Worker Learning And Compensating Differentials, W. Kip Viscusi, Michael J. Moore

Vanderbilt Law School Faculty Publications

In the standard compensating wage differential model, workers value their wage and workers' compensation components based on full job risk information. Market forces generate positive wage differentials as ex ante compensation for exposure to relatively high risk. Similarly, market forces generate wage offsets for the increases in ex post risk compensation embodied in workers' compensation benefits. These predictions can be modified to take into account potential imperfections in worker information, as in Viscusi (1979a,b, 1980a,b,d), where the role of learning is incorporated into the worker's decision model. The potential for learning about risks introduces a new market response through worker …