Employer Monopsony Power Does Not Reduce the Value of a Statistical Life

Abstract Although wage rates are lower when employers have monopsony power, we find that the value of a statistical life (VSL) is not reduced when labor markets are more concentrated. Because the estimated VSL is the product of the wage and the wage-risk tradeoff rate, a greater tradeoff rate in highly concentrated U.S. labor markets produces a larger VSL. The general relationship we find is robust with respect to different labor market data. Our results provide the first evidence contradicting policy-related concerns that the VSL is lower in monopsonistic labor markets. The average VSL is often about $13 million (USD 2022) both for the full sample and at the median market concentration level, and it does not decline at higher levels of HHI.