The economics of non-wage job amenities: A supply-side approach

• Applicants: Professor Dr. Markus Nagler; Dr. Michael Stops; Dr. Erwin Winkler
• Subject Area: Economic Policy, Applied Economics ; Statistics and Econometrics
• Term: since 2025
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 568467317

Non-wage amenities (hereafter NWA) are very important for the understanding and functioning of the labor market, but have so far been insufficiently studied. Recent research estimates that around 15-25% of the remuneration of employees in developed countries is based on such NWA. Many empirical findings, such as systematic voluntary changes to lower-paid jobs or gender differences in pay and job choices, can be explained with the help of NWA. Researchers have recently mainly focused on the preferences of employees for certain NWA. There is, however, little literature on employers' decisions to offer NWA. Against this background, this research project aims to investigate the supply side of NWA. Specifically, the research project aims to answer two research questions. The first research question examines how companies evaluate different NWA relative to wages. Additionally, we will investigate whether these valuations systematically depend on company characteristics. The second research question focuses on how economic shocks such as an increase in labor market tightness affect the supply of NWA. This is important against the background of increasing tightness in labor markets both in Germany and the US and expectations of accelerating demographic change. In the spirit of established methods in the literature for measuring employee preferences regarding NWA, the first part of the project involves conducting discrete choice experiments with HR managers from German companies. This is implemented as an online survey within the ifo HR-Befragung (ifo HR survey). The implementation of such discrete choice experiments with HR managers has hardly been carried out to date. Thus, this part of the project would innovatively expand existing approaches and enable a reliable quantification of the willingness of companies to provide NWA. The second part of the research project uses job advertisements posted on the website of the Federal Employment Agency to measure and quantify NWA. A key advantage of these data over online job advertisements is its straightforward and accurate link to establishment and social security data via the establishment number. This would allow a more in-depth analysis of NWA, primarily through the link to establishment characteristics and to data on local labor market tightness. We will leverage these data to study the impact of local labor market tightness on the supply of NWA and investigate to what extent heterogeneities in the supply costs of NWA determine production costs of establishments.

• DFG Programme: Research Grants
• Co-Investigator: Professor Dr. Johannes Rincke