Hammitt, James K., Liu, Jin-Tan and Tsai, W-J (2011) Aggregation Biases in Estimates of the Value of a Statistical Life: Evidence from Logitudianl Matched Worker-Firm Data in Tawain. Environmental and Resource Economics, 49 (3). pp. 425-449.

Abstract

This study uses a unique longitudinally-linked employer–employee dataset to
estimate the magnitude of bias in estimating the value per statistical life (VSL) that arises
from the conventional use of industry-average occupational risk. This unique dataset, covering
workers in Taiwan over the period 1998–2002, allows us to distinguish among potential
sources of bias including omitted variables and to control for the potential endogeneity of
firm-specific job risk with respect to unobserved worker and firm characteristics. We find
that VSL estimates based on risk data aggregated by three-digit manufacturing SIC codes
are biased downward by an order of magnitude compared with estimates using firm-specific
risk that control for endogeneity.