This paper analyzes the behavior of a competitive risk-averse firm that has to choose the optimal level of labor and preventive safety measures. If the firm's injury function includes a random component, then the firm is characterized by a lower demand for labor and by a higher demand for safety measures with respect to a firm whose injury risk is completely under its control. The comparative statics show that shifts in the parameters of the risk distribution will have effects that depend on the absolute risk-aversion functions. The introduction of safety standards will prompt a reduction in the demand for labor while a tightening of the compensation system will have ambiguous effects on the demand for the two inputs.
Risky Production Processes and Demand for Safety Under Uncertainty
DI MAURO, Carmela
1994-01-01
Abstract
This paper analyzes the behavior of a competitive risk-averse firm that has to choose the optimal level of labor and preventive safety measures. If the firm's injury function includes a random component, then the firm is characterized by a lower demand for labor and by a higher demand for safety measures with respect to a firm whose injury risk is completely under its control. The comparative statics show that shifts in the parameters of the risk distribution will have effects that depend on the absolute risk-aversion functions. The introduction of safety standards will prompt a reduction in the demand for labor while a tightening of the compensation system will have ambiguous effects on the demand for the two inputs.File | Dimensione | Formato | |
---|---|---|---|
ga1994_gr19(1)_di_mauro.pdf
accesso aperto
Tipologia:
Versione Editoriale (PDF)
Licenza:
PUBBLICO - Pubblico con Copyright
Dimensione
903.83 kB
Formato
Adobe PDF
|
903.83 kB | Adobe PDF | Visualizza/Apri |
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.