Show Me the Amenity: Are Higher-Paying Firms Better All Around?
73 Pages Posted: 18 Nov 2021
Date Written: November 5, 2021
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: Suggested Citation