Will Markets Provide Humane Jobs?

Abstract

Today social contracts regulate the key amenities of our jobs, and social movements have been essential for their adoption. This paper argues that this overlooked observation can help improve the future provision of amenities. Markets underprovide an amenity with a negative productivity-taste correlation: when those who value the amenity more than its price have a lower average unobserved productivity than those who value it less. The universal mandate is optimal for amenities with a high correlation. With a mild correlation, the optimal policy leverages observable heterogeneity, e.g., allowing jobs to offer flexible hours or remote work to parents with young children at a lower price –a lower compensating wage differential.

Keywords: Amenity, Labor Market, Mandated Benefits