Assets and Job Choice: Student Debt, Wages and Amenities

53 Pages Posted: 9 May 2019

See all articles by Mi Luo

Mi Luo

Emory University

Simon Mongey

University of Chicago

Multiple version iconThere are 3 versions of this paper

Date Written: May 2019


If consumption and non-wage amenities of work enter utility, holding few assets may induce a trade-off between wages and amenities when searching for a job. We establish this in a model of search with asset accumulation, extended to accommodate amenities. We then provide empirical evidence of this trade-off in the context of student debt, finding that higher debt causes graduates to accept jobs with higher wages and lower job satisfaction. In a representative sample of college graduates, we infer causality by exploiting within-college, across cohort changes in financial aid. A quantitative extension of our theoretical framework that explicitly models student debt accounts well for our empirical results. Identifying the utility value of amenities through observed search behavior, we find that high satisfaction jobs are valued at 6 percent of lifetime consumption relative to low satisfaction jobs. This trade-off is economically significant; a policy maker using only wage data to assess the welfare effects of with an income-based repayment policy would mistakenly conclude that graduates prefer a fixed repayment policy.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at

Suggested Citation

Luo, Mi and Mongey, Simon, Assets and Job Choice: Student Debt, Wages and Amenities (May 2019). NBER Working Paper No. w25801. Available at SSRN:

Mi Luo (Contact Author)

Emory University ( email )

201 Dowman Drive
Atlanta, GA 30322
United States

Simon Mongey

University of Chicago ( email )

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics