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Wages or Fringes? Some Evidence on Trade-offs and Sorting

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  • Wp 10-16

    Final published version, 737 KB, PDF document

  • Department of Economics
  • Center for Corporate Performance (CCP)

The two key predictions of hedonic wage theory are that there is a trade-o¤ between wages and nonmonetary rewards and that the latter can be used as a sorting device by firms to attract and retain the kind of employees they desire. Empirical analysis of these topics are scarce as they require detailed data on all monetary as well as nonmonetary rewards, not only for the job chosen but also for alternative offers. In this paper this data predicament is solved by the use of the vignettes method to estimate individuals. willingness to pay for fringe benefits and job amenities. We find clear negative wage-fringe trade-offs, con-siderable heterogeneity in willingness to pay for fringe benefits, and signs of sorting. The findings imply that personnel economics models can be applied also to the analysis of nonmonetary rewards.

Original languageEnglish
Place of publicationAarhus
PublisherAarhus School of Business, Aarhus University, Department of Economics
Number of pages43
ISBN (Print)9788778824899
ISBN (Electronic)9788778824905
Publication statusPublished - 2010

    Research areas

  • Fringe benefits, Nonmonetary rewards, Trade-off, Sorting, Heterogenity

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