Labor Supply and Productivity Responses to Non-Salary Benefits: Do They Work? If So, at What Level Do They Work Best?

Marilyn Spencer (), Deniz Gevrek (), Valrie Chambers () and Randall Bowden ()
Additional contact information
Marilyn Spencer: Texas A&M University Corpus Christi
Valrie Chambers: Stetson University
Randall Bowden: Texas A&M University Corpus Christi

No 9153, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This study explores the impact of a particular low marginal-cost employee benefit on employees' intended retention and performance. By utilizing a unique data set constructed by surveying full-time faculty and staff members at a public university in the United States, we study the impact of this employee benefit on faculty and staff performance and retention. We focus on the impact of reduction in dependent college tuition at various levels on employees' intentions to work harder and stay at their current job by using both OLS and Ordered Probit models. We also simulate the direct opportunity cost (reduction in revenue) in dollars and as a percent of total budgeted revenue to facilitate administrative decision making. The results provide evidence that for institutions where employee retention and productivity are a priority, maximizing or offering dependent college tuition waiver may be a relatively low-cost benefit to increase intended retention and productivity. In addition, the amount of the tuition waiver, number of dependents and annual salary are statistically significant predictors of intended increased productivity and intent to stay employed at the current institution. Employee retention and productivity is a challenge for all organizations. Although pay, benefits, and organizational culture tend to be key indicators of job satisfaction, little attention is given to specific types of benefits. This study is the first comprehensive attempt to explore the relationship between the impact of this low-cost employee benefit and employee performance and retention in a higher education institution in the United States.

Keywords: productivity; employee satisfaction; retention; higher education; job satisfaction; fringe benefits (search for similar items in EconPapers)
JEL-codes: J22 J32 J45 M52 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2015-06
New Economics Papers: this item is included in nep-edu, nep-eff, nep-hap, nep-hrm and nep-lma
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Published - published in: Personnel Review, 2016, 45 (5), 1047-1068

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