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Pricing Job Amenities: A Practitioner's Manual

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  • Alex Bell

Abstract

This paper provides a practical framework for estimating compensating differentials in the presence of unobserved worker ability. The approach treats ability as a structured residual that shapes access to both wages and non-pay job attributes. Job choice is assumed to be governed by a single vertical job-quality index, and—conditional on this index—an observed proxy for ability acts as an "anti-instrument" that allows researchers to recover amenity prices from standard observational data. Identification relies on a simple conditional independence assumption: if pay, amenities, and underlying job quality were fully observed, the anti-instrument would add no additional information. The paper emphasizes implementation and interpretation rather than technical proofs, offering a practical roadmap for applied researchers; adoption is supported by the companion aivreg Stata package, which enables estimation using standard cross-sectional datasets. An application to the experimental setting of Mas and Pallais (2017) shows that the pricing method reproduces experimentally measured willingness-to-pay patterns with observational data, further validating the strength of both the experimental and observational approaches.

Suggested Citation

  • Alex Bell, 2026. "Pricing Job Amenities: A Practitioner's Manual," CESifo Working Paper Series 12726, CESifo.
    • Handle: RePEc:ces:ceswps:_12726
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    File URL: https://www.ifo.de/DocDL/cesifo1_wp12726.pdf
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Emily Oster, 2019. "Unobservable Selection and Coefficient Stability: Theory and Evidence," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(2), pages 187-204, April.
    3. Ferreira, Susana & de Morentin, Sara Martínez & Erro-Garcés, Amaya, 2025. "Measuring job risks when hedonic wage models do not do the job," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).
    4. Bell, Alex, 2020. "Job Amenities & Earnings Inequality," MPRA Paper 118516, University Library of Munich, Germany.
    5. Olle Folke & Johanna Rickne, 2022. "Sexual Harassment and Gender Inequality in the Labor Market [High Wage Workers and High Wage Firms]," The Quarterly Journal of Economics, Oxford University Press, vol. 137(4), pages 2163-2212.
    6. Vanessa C. Burbano & Olle Folke & Stephan Meier & Johanna Rickne, 2024. "The Gender Gap in Meaningful Work," Management Science, INFORMS, vol. 70(10), pages 7004-7023, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions

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