The Distribution of Non-Wage Benefits: Maternity Benefits and Gender Diversity

Abstract

Why do firms offer non-wage compensation instead of the equivalent amount in financial compensation? We argue that firms use non-wage benefits, specifically female-friendly benefits such as maternity leave, to increase gender diversity by efficiently attracting women. Using Glassdoor data, we show that firms offer higher quality maternity leave benefits in labor markets where female talent is relatively scarce. This result also holds more generally when examining all female-friendly non-wage benefits and is not present when looking at benefits which are gender-neutral. Moreover, using staggered adoption of state laws, we show that voluntary provision of these benefits can increase firm value.

Keywords: Non-Wage Compensation, Compensation, Corporate Finance