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

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  • Tor Eriksson
  • Nicolai Kristensen

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.

Suggested Citation

  • Tor Eriksson & Nicolai Kristensen, 2014. "Wages or Fringes? Some Evidence on Trade-Offs and Sorting," Journal of Labor Economics, University of Chicago Press, vol. 32(4), pages 899-928.
  • Handle: RePEc:ucp:jlabec:doi:10.1086/676662
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    Cited by:

    1. DeVaro, Jed & Maxwell, Nan & Morita, Hodaka, 2016. "Compensation and Intrinsic Motivation in Nonprofit and For-Profit Organizations," CEI Working Paper Series 2015-10, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    2. Van Belle, Eva & Caers, Ralf & De Couck, Marijke & Di Stasio, Valentina & Baert, Stijn, 2017. "Why Is Unemployment Duration a Sorting Criterion in Hiring?," IZA Discussion Papers 10876, Institute for the Study of Labor (IZA).
    3. MORIKAWA Masayuki, 2018. "Uncertainty over Working Schedules and Compensating Wage Differentials: From the viewpoint of labor management," Discussion papers 18015, Research Institute of Economy, Trade and Industry (RIETI).
    4. Van Belle, Eva & Caers, Ralf & De Couck, Marijke & Di Stasio, Valentina & Baert, Stijn, 2018. "The Signal of Applying for a Job Under a Vacancy Referral Scheme," GLO Discussion Paper Series 173, Global Labor Organization (GLO).
    5. repec:eee:jeborg:v:139:y:2017:i:c:p:196-213 is not listed on IDEAS

    More about this item

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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