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Firm Premia and Match Effects in Pay vs. Amenities

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Listed:
  • Anders Humlum
  • Mette Rasmussen
  • Evan K. Rose

Abstract

This paper develops a new approach to measuring non-wage amenities and compensating differentials in the labor market. Using a survey of 20,000 job movers in Denmark, we elicit workers’ reservation wage to return to their previous jobs. Our sample contains a large, connected network of firms, enabling us to estimate firm-wide premia and match effects in amenity values. Overall, higher-paying firms provide slightly worse non-pay amenities. Although they provide better perks and flexibility, they also come with higher layoff risk, faster work pace, and greater stress. On average, moves to jobs offering 10% higher pay involve a 5% reduction in the value of amenities, with 0.7% attributable to firm-wide tradeoffs and the remainder attributable to match effects in pay and preferences. Using a rich search model, we quantify the role of amenities in labor market inequality while accounting for preference heterogeneity and endogenous mobility. Worse amenities at high-paying firms offset more than half of their wage advantage, and the within-worker variance in pay across firms overstates the variance in utility by 50%.

Suggested Citation

  • Anders Humlum & Mette Rasmussen & Evan K. Rose, 2025. "Firm Premia and Match Effects in Pay vs. Amenities," NBER Working Papers 33884, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33884
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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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