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

Tor Eriksson, Nicolai Kristensen

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Abstract

The two key predictions of hedonic wage theory are that there is a trade-off 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. We use the vignettes method to estimate individuals' willingness-to-pay for fringe benefits and job amenities. We find negative wage-fringe trade-offs, considerable heterogeneity in willingness-to-pay for fringe benefits, and signs of sorting.
Original languageEnglish
JournalJournal of Labor Economics
Volume32
Issue4
Pages (from-to)899-928
Number of pages31
ISSN0734-306X
Publication statusPublished - 2014

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