The value of statistical life (VSL) is the monetary value placed by society on the reduced probability of death. It is essential in policy making as a reference point to balance the risk reductions with cost. ct
This paper uses the hedonic wage method to directly estimate Indonesia’s value of statistical life (VSL). However, there exists selection bias; individuals first determine whether to engage in paid or unpaid labor before choosing from the available job opportunities. To account for this selection decision, this paper incorporates Heckman’s sample selection model. The microdata of the labor market is obtained from Statistics Indonesia’s National Labor Force Survey; it includes information on the working age sample’s personal, occupational, firm, and geographical characteristics. Records of the occupational risk rate are drawn from Indonesia’s Social Security Administrator for Labor Force (Badan Pusat Jasa Ketenagakerjaan or BPJS). From the hedonic wage model, Indonesia’s VSL is estimated to be around US $950,000.