Show Me the Amenity: Are Higher-Paying Firms Better All Around?

Abstract

Do that pay more offer better amenities, or does the greater pay compensate for worse amenities? Using matched U.S. employee-employer data, this paper estimates the joint distribution of wages, amenities, and job satisfaction across firms. Fifty amenities are captured applying topic modeling to workers' free-response descriptions of their jobs. Three main findings emerge. First, higher-paying firms offer better amenities. Second, employees value amenities: one-third have a more pronounced effect on satisfaction than pay. Third, since workers are willing to pay for satisfaction and because the covariance between amenities and wages is sufficiently high, amenities widen compensation dispersion across firms. (link to WP)

Jason is currently a postdoc scholar with IZA in Berlin. In Fall 2024, he will join the ILR School at Cornell University as Assistant Professor. He conducts research in the areas or personnel and labor economics, and is interested in firms’ and workers’ interactions in the labor market. He has published research in the Journal of Political Economy, Journal of Labor Economics, Management Science, and American Economic Review.