How does hazard exposure influence job choice? Evaluating time-dependent tradeoffs between salary and hazard risks

Abstract

Natural hazards are a nonmarket disamenity that affects an individual's search for employment resulting in a negative environmental impact that produces an economic inefficiency. We develop a seek-and-screen job search approach that uses a discrete choice simulation to examine how salary, crime, and natural hazard risk influence job choice. We model the job decision process as a series of elimination events using a Cox hazard model grounded in a Random Utility Model. We use data from the discrete choice simulation to estimate both a standard proportional hazards model and an extended specification that allows the effect of natural hazard risk to vary across decision rounds. Individuals are exposed to the dynamics of a simulated job search as they make decisions between pairs of job offers in an adaptive learning process based on income, geography, crime level, and natural hazard attributes. The results of the job choice decisions provide the input to a statistical survival analysis. The results indicate that salary and crime exert stable and economically intuitive effects on job elimination, with higher salary reducing and higher crime increasing the likelihood of removal. In contrast, natural hazard risk exhibits a time-varying effect that increases the probability of elimination in early rounds but becomes neutral or favorable in later stages of the decision process. These findings suggest that environmental risk is evaluated differently as individuals transition from initial screening to final job selection, highlighting the importance of modeling job choice as a multi-stage process.