The Effect of Non-Wage Competition on Corporate Profits

Ioannis Branikas, Briana Chang, Harrison Hong and Nan Li

No 33870, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Most S&P 500 corporations disclose that their profits depend on non-wage competition for worker talent via workplace amenities like work-life balance. We quantify this dependence using a labor market matching model with endogenous amenities. When productive (unproductive) firms provide the amenities demanded by workers at a lower cost, firm quality becomes more (less) dispersed relative to worker quality, which results in higher (lower) firm profits due to competition. This cost advantage is identified with data on wages, worker satisfaction, and firm scale. Calibrating our model to Glassdoor surveys, a 1% increase in workers’ non-pecuniary preferences raises firm profits by 0.6%.

JEL-codes: G0 G3 G39 J3 J31 J33 (search for similar items in EconPapers)
Date: 2025-05
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