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

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  • Jason Sockin

Abstract

Do firms 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.

Suggested Citation

  • Jason Sockin, 2022. "Show Me the Amenity: Are Higher-Paying Firms Better All Around?," CESifo Working Paper Series 9842, CESifo.
    • Handle: RePEc:ces:ceswps:_9842
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    3. Morchio, Iacopo & Moser, Christian, 2018. "The Gender Pay Gap: Micro Sources and Macro Consequences," MPRA Paper 99276, University Library of Munich, Germany, revised 24 Mar 2020.
    4. Anikó Bíró & Péter Elek, 2024. "Firm quality and health maintenance," IFS Working Papers W24/58, Institute for Fiscal Studies.
    5. Iacopo Morchio & Christian Moser, 2025. "The Gender Pay Gap: Micro Sources and Macro Consequences," CESifo Working Paper Series 11617, CESifo.
    6. Pawe{l} Gola & Yuejun Zhao, 2024. "A Firm Link: Overall, Between- and Within-Firm Inequality Through the Lens of a Sorting Model," Papers 2410.11532, arXiv.org.
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    9. Timothy Perri Perri, 2023. "The Death of Labor Market Competition Has Been Greatly Exaggerated," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 38(Summer 20), pages 39-54.
    10. Dami'an Vergara, 2022. "Minimum Wages and Optimal Redistribution," Papers 2202.00839, arXiv.org, revised Dec 2022.
    11. Lagos, Lorenzo, 2024. "Union Bargaining Power and the Amenity-Wage Tradeoff," IZA Discussion Papers 17034, Institute of Labor Economics (IZA).
    12. Richard Audoly & Manudeep Bhuller & Tore Adam Reiremo, 2024. "The Pay and Non-Pay Content of Job Ads," Staff Reports 1124, Federal Reserve Bank of New York.
    13. Job Boerma & Aleh Tsyvinski & Ruodu Wang & Zhenyuan Zhang, 2023. "Composite Sorting," Papers 2303.06701, arXiv.org, revised Sep 2024.
    14. Brian Callaci & Matthew Gibson & Sérgio Pinto & Marshall Steinbaum & Matt Walsh, 2024. "Grads on the Go: The Effect of Franchise No-Poaching Restrictions On Worker Earnings," Upjohn Working Papers 24-405, W.E. Upjohn Institute for Employment Research.
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    More about this item

    Keywords

    job amenities; job satisfaction; inequality;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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