Firm Premia and Match Effects in Pay vs. Amenities

Anders Humlum, Mette Rasmussen and Evan K. Rose

No 33884, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a new approach to measuring non-wage amenities and compensating differentials in the labor market. Using a survey of 20,000 job movers in Denmark, we elicit workers’ reservation wage to return to their previous jobs. Our sample contains a large, connected network of firms, enabling us to estimate firm-wide premia and match effects in amenity values. Overall, higher-paying firms provide slightly worse non-pay amenities. Although they provide better perks and flexibility, they also come with higher layoff risk, faster work pace, and greater stress. On average, moves to jobs offering 10% higher pay involve a 5% reduction in the value of amenities, with 0.7% attributable to firm-wide tradeoffs and the remainder attributable to match effects in pay and preferences. Using a rich search model, we quantify the role of amenities in labor market inequality while accounting for preference heterogeneity and endogenous mobility. Worse amenities at high-paying firms offset more than half of their wage advantage, and the within-worker variance in pay across firms overstates the variance in utility by 50%.

JEL-codes: J31 J32 (search for similar items in EconPapers)
Date: 2025-05
New Economics Papers: this item is included in nep-hrm and nep-lma
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