A Clarification Regarding NBER Working Paper 33643

This note clarifies the identifying assumptions underlying the approach in Bell (2020) and addresses a specific misinterpretation appearing in Mas (2025). That secondary source stated that the method requires independence between workers’ productivity and preferences over amenities. This characterization is not implied by the method, nor any previous iterations of it. Identification instead relies on a conditional independence assumption that pertains to a third observed variable, such as education, which the method casts as a shifter of individuals’ offer sets. The assumption stipulates that the shifter must be relevant to the quality of the offer set, but irrelevant to how workers split their compensation into pay versus amenities conditional on the quality of the offer set. Contrary to the Mas (2025) critique, the model in fact allows for arbitrary correlations between productivity and preferences. This note’s purpose is to clarify the record regarding these identifying assumptions, which in turn shape how empirical evidence using this approach is evaluated in practice.