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Estimating Wage-Fringe Trade-Offs: Some Data Problems

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  • Robert S. Smith
  • Ronald G. Ehrenberg
Abstract
Our paper attempts to identify the types of data nee3ed to estimate tradeoffs between wages and fringe benefits (such as pensions); it also explores the usefulness for this estimation of one particular employer- based data set collected by gay Associates. We stress three things: first, that employer-based data sets are required. Second, because pensions and many other fringe benefits are actuarial functions of wages or salaries, these technical relationships must be accounted for in estimation. Third, to take account of unobservable heterogeneity of employees across employers, one must use econometric methods that control for these unobservable variables. The paper concludes with a discussion of our attempts to estimate the tradeoff between wages and fringe benefits using a unique database for 200 establishments that contains information on wages and actuarial valuations of employer costs of fringe benefits at three different job levels.

Suggested Citation

  • Robert S. Smith & Ronald G. Ehrenberg, 1981. "Estimating Wage-Fringe Trade-Offs: Some Data Problems," NBER Working Papers 0827, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0827
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    References listed on IDEAS

    as
    1. Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-620, September.
    2. Roger H. Gordon & Alan S. Blinder, 1980. "Market Wages, Reservation Wages, and Retirement Decisions," NBER Chapters, in: Econometric Studies in Public Finance, pages 277-308, National Bureau of Economic Research, Inc.
    3. Ehrenberg, Ronald G. & Schwarz, Joshua L., 1987. "Public-sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 22, pages 1219-1260, Elsevier.
    4. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-1284, December.
    5. Smith, Robert Stewart, 1981. "Compensating Differentials for Pensions and Underfunding in the Public Sector," The Review of Economics and Statistics, MIT Press, vol. 63(3), pages 463-468, August.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Hutchens, R & Nolen, PJ, 2006. "Will The Real Family-Friendly Employer Please Stand Up: Who Permits Parents To Reduce Working Hours For Purposes of Childcare?," Economics Discussion Papers 2905, University of Essex, Department of Economics.
    2. Steven G. Allen & Robert L. Clark, 1987. "Pensions and Firm Performance," NBER Working Papers 2266, National Bureau of Economic Research, Inc.
    3. Xinxin Ma & Jie Cheng, 2020. "The Impact of Social Insurance Contributions on Firms Employment and Wages: Evidence from China Employer-Employee Matching Survey Data," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(1), pages 42-60, March.
    4. Goldman, Dana P. & Sood, Neeraj & Leibowitz, Arleen, 2005. "The reallocation of compensation in response to health insurance premium increases," Economics Letters, Elsevier, vol. 88(2), pages 147-151, August.
    5. Montgomery, Edward & Shaw, Kathryn, 1997. "Pensions and Wage Premia," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 510-522, July.
    6. Montgomery, Edward & Shaw, Kathryn & Benedict, Mary Ellen, 1992. "Pensions and Wages: An Hedonic Price Theory Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(1), pages 111-128, February.
    7. Jonathan Gruber & Alan B. Krueger, 1991. "The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 111-144, National Bureau of Economic Research, Inc.
    8. Robert L. Clark & Joseph F. Quinn, 1999. "Effects of Pensions on Labor Markets and Retirement," Boston College Working Papers in Economics 431, Boston College Department of Economics.
    9. Lubotsky, Darren & Olson, Craig A., 2015. "Premium copayments and the trade-off between wages and employer-provided health insurance," Journal of Health Economics, Elsevier, vol. 44(C), pages 63-79.
    10. Steven F. Venti, 1987. "Wages in the Federal and Private Sectors," NBER Chapters, in: Public Sector Payrolls, pages 147-182, National Bureau of Economic Research, Inc.
    11. Marjorie Honig & Irena Dushi, 2005. "Household Demand for Health Insurance: Price and Spouse's Coverage," Economics Working Paper Archive at Hunter College 411, Hunter College Department of Economics.
    12. Henry J. Aaron & Barry P. Bosworth, 1994. "Economic Issues in Reform of Health Care Financing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1994 Micr), pages 249-299.
    13. Haynes, Jonathan B. & Sessions, John G., 2013. "Work now, pay later? An empirical analysis of the pension–pay trade off," Economic Modelling, Elsevier, vol. 30(C), pages 835-843.
    14. Patricia M. Anderson & Bruce D. Meyer, "undated". "The Incidence of a Firm-Varying Payroll Tax: The Case of Unemployment Insurance," IPR working papers 95-23, Institute for Policy Resarch at Northwestern University.
    15. Dana Goldman & Neeraj Sood & Arleen Leibowitz, 2005. "Wage and Benefit Changes in Response to Rising Health Insurance Costs," NBER Working Papers 11063, National Bureau of Economic Research, Inc.
    16. Anderson, Patricia M. & Meyer, Bruce D., 1997. "The effects of firm specific taxes and government mandates with an application to the U.S. unemployment insurance program," Journal of Public Economics, Elsevier, vol. 65(2), pages 119-145, August.
    17. O'Shaughnessy, K C & Levine, David I & Cappelli, Peter, 2001. "Changes in Managerial Pay Structures 1986-1992 and Rising Returns to Skill," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 482-507, July.
    18. Stephen DeLoach & Jennifer Platania, 2013. "The Macroeconomic Consequences of Financing Health Insurance," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 19(2), pages 107-129, May.
    19. Guillermo Mondino & Silvia Montoya, 2000. "The Effects of Labor Market Regulations on Employment Decisions by Firms: Empirical Evidence for Argentina," Research Department Publications 3091, Inter-American Development Bank, Research Department.
    20. Jonathan Gruber, 1998. "Health Insurance and the Labor Market," NBER Working Papers 6762, National Bureau of Economic Research, Inc.
    21. Dale-Olsen, Harald, 2006. "Wages, fringe benefits and worker turnover," Labour Economics, Elsevier, vol. 13(1), pages 87-105, February.
    22. repec:eee:labchp:v:3:y:1999:i:pc:p:3309-3416 is not listed on IDEAS
    23. Janet Currie, 1993. "Gender Gaps in Benefits Coverage," NBER Working Papers 4265, National Bureau of Economic Research, Inc.
    24. Erica L. Groshen, 1988. "Why do wages vary among employers?," Economic Review, Federal Reserve Bank of Cleveland, vol. 24(Q I), pages 19-38.

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