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Title: Is Cash Still King: Why Firms Offer Non-Wage Compensation and the Implications for Shareholder Value
Citation Type: Miscellaneous
Publication Year: 2017
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Abstract: Over the past 40 years, the share of non-wage benefits in employee compensation grew from 5% to 30%. Using disaggregated data from Glassdoor, we first document a series of stylized facts about the availability of non-wage benefits and how these benefits are correlated with firm characteristics. We subsequently test three non-mutually exclusive hypotheses explaining the cross-section of non-wage benefits: (i) tax advantages, (ii) attracting and retaining specific employee groups, and (iii) mitigating the disutility of work. We find empirical evidence in support of all three hypotheses. Moreover, firms with higher rated benefits exhibit larger ex-post equity returns, suggesting that differences in non-cash types of compensation are not fully priced by the market.
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Authors: Liu, Tim; Makridis, Christos; Ouimet, Paige; Simintzi, Elena
Publisher: University of North Carolina
Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure
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