Wage Differentials between Heat-Exposure Risk and No Heat-Exposure Risk Groups

• Main Authors: Donghyun Kim, Up Lim
• Format: Article
• Language: English
• Published: MDPI AG 2017-06-01
• Series: International Journal of Environmental Research and Public Health
• Subjects: wage differential; heat-exposure risk; Blinder-Oaxaca method; Juhn-Murphy-Pierce method
• Online Access: http://www.mdpi.com/1660-4601/14/7/685

The goal of this study is to investigate the wage differential between groups of workers who are exposed to heat and those who are not. Workers in the heat-exposure risk group are defined as workers who work in conditions that cause them to spend more than 25% of their work hours at high temperatures. To analyze the wage differential, the Blinder-Oaxaca and Juhn-Murphy-Pierce methods were applied to Korea Working Condition Survey data. The results show that the no heat-exposure risk group received higher wages. In most cases, this can be interpreted as the endowment effect of human capital. As a price effect that lowers the endowment effect, the compensating differential for the heat-exposure risk group was found to be 1%. Moreover, education level, work experience, and employment status counteracted the compensating differentials for heat-exposure risks. A comparison of data sets from 2011 and 2014 shows that the increasing wage gap between the two groups was not caused by systematic social discrimination factors. This study suggests that wage differential factors can be modified for thermal environmental risks that will change working conditions as the impact of climate change increases.