Job Hazards and Worker Quit Rates: An Analysis of Adaptive Worker Behavior

Workers seldom have perfect information about the health and safety implications of their jobs. For many hazards, the true probabilities of being killed or injured are not known by anyone. Due to the retarded state of occupational medicine, even the underlying medical ramifications of different exposures to aspects of the workplace such as radiation, noise, high temperatures, and chemical vapors are little understood. This uncertainty is compounded by uncertainty with regard to the characteristics of the work situation, for example, the concentration of asbestos fibers in the air. The past experiences of other workers are likely to be of little assistance in eliminating this uncertainty. Unlike wage rates which can be compared in relative and absolute terms, there is no single recognized metric for measuring health and safety hazards. Differences in individual preferences for varying risks limit the usefulness of any summary index. More fundamentally, the job outcome information that would be used to evaluate past injury or illness frequencies is inadequate since many ailments are difficult to monitor or occur so infrequently that only the weakest of inferences can be drawn from the small samples available. These shortcomings are particularly acute for hazards that do not have immediate and recognizable effects. Finally, to the extent that the probabilities of job outcomes depend on the worker's own actions and health characteristics, any assessment of the probabilities of job outcomes would involve modifying the average job outcome probabilities to take these differences into account. The imperfect nature of worker information implies that workers will base their job choices on their subjective assessments of the risk rather than on a definitive objective index. Recent applications and extensions of Adam Smith's 1937 compensating wage differential analysis by Oi 1973, Thaler and Rosen 1976, R. Smith 1976, and myself in Viscusi forthcoming-b indicate that workers will demand wage premiums for jobs posing added risks. In the static models that have been developed, the probabilities associated with different job outcomes