Show Me the Amenity: Are Higher-Paying Firms Better All Around?

73 Pages Posted: 18 Nov 2021

Date Written: November 5, 2021

Abstract

Do higher-paying firms offer more favorable work, or compensate for less favorable work? Using matched employee-employer data for the United States, this paper estimates the joint distribution of wages, amenities, and job satisfaction across firms. Forty-eight amenities are captured by applying topic modeling to workers' free-response descriptions of their jobs. There are three main findings. First, high-paying firms are high-satisfaction firms because they offer better amenities: 81-92 percent of the rise in job satisfaction from moving to a higher-paying firm reflects improved non-wage aspects. Second, workers, especially high-earners, are willing to pay for job satisfaction, gaining in amenity value at least 54-101 percent of the average wage when moving from the worst- to the best-amenity firms. Third, since the elasticity of amenity value to wages across firms is positive (1.0-1.8), incorporating non-wage amenities nearly doubles the variance in total compensation across firms. Wages therefore understate firm-level inequality.

Keywords: Job Amenities, Inequality, Job Satisfaction

JEL Classification: J01, J32, M50

Suggested Citation

Sockin, Jason, Show Me the Amenity: Are Higher-Paying Firms Better All Around? (November 5, 2021). Available at SSRN: https://ssrn.com/abstract=3957002 or http://dx.doi.org/10.2139/ssrn.3957002

Jason Sockin (Contact Author)

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

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