Acton Institute PowerBlog

Why increasing job safety lowers workers wages

Note: This is post #58 in a weekly video series on basic microeconomics.

Here’s a surprising fact: Firms have an incentive to increase job safety, because then they can lower wages.

In this video by Marginal Revolution University, economist Alex Tabarrok explores this claim in much greater depth and answers the questions: Why do riskier jobs often pay more? Why has job safety increased over the years? How does a firm’s profit motive play a role?

(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Previous in series: The tradeoff between fun and wages