The value of job amenities and its impact on inequality and returns to education
The overarching goal of this project is to identify how workers value jobs, which is essential to evaluate the current state of the labour market in terms of efficiency, inequality and returns to education. We start by evaluating the accuracy-cost tradeoff of three existing methods eliciting the willingness to pay for job characteristics in general and for job security in particular. Then we use the most cost-effective approach to determine whether there are diminishing marginal returns to job quality improvements, which hitherto have been assumed constant in the literature (e.g. Maestas et al., 2019).
Combined, this allows us to estimate job quality adjusted measures of earnings inequality in the United States in terms of gender, race, education and the income distribution. Moreover, the value of job security to employees can be used to explain the prevalence of stable employment contracts despite their moral hazard risks. Our results are also relevant to evaluate studies of job mobility and entrepreneurship which often invoke job amenities to rationalise moves to lower paying (self-)employment (e.g. Hamilton, 2000). Finally, the insights we generate on eliciting and aggregating preferences are relevant throughout society, from politicians weighing policy gains and losses to marketeers designing new consumer products and pharmaceutical companies balancing medicinal side effects.
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