The Role of Wages and Benefits in Job Search

The paper presented in this Mannheim Applied Seminar analyzes the importance of wages and job benefits for job seekers based on a large-scale field experiment. To quantify the elasticity of job seekers' applications with respect to posted wages and their willingness to pay for 12 job benefits, the authors randomly provide users of 112 Swiss job boards with supplementary information on wages and benefits associated with the positions they explore---information sourced from the market-leading employer review platform. They interpret the field-experimental estimates by measuring job seekers’ prior and posterior beliefs about wages and benefits in a complementary survey experiment. The revealed-preference estimates suggest that a 1% increase in the posted wage increases the likelihood that job seekers view and apply to an advertisement by 0.5%. Their estimates imply that job seekers’ own-wage elasticity of job applications is approximately 3, because they update their expectations about their own pay in response to posted wages only partially and are quite well informed about ex ante wage differences across jobs. In addition, 4 of the 12 job benefits are highly valued by job seekers: work from home and company car are valued at 10% and firm-sponsored childcare at 6% of wages. The average position offers job benefits worth 11% of wages. Since higher-paying companies tend to offer more benefits, inequality in job value is significantly higher than inequality in wages.