Instead of using wage differentials to identify the value of non-wage characteristics, differential job quitting can be exploited.By observing the relative importance of differences in non-wage characteristics vis-à-vis wages in determining job leaving, it is possible to estimate workers'marginal willingness to pay (MWP) for physical working conditions (Gronberg and Reed, 1994), commuting distance (van Ommeren et al., 2000) or the remaining duration of a contract (van
Ommeren and Hazans, 2008). The approach allows an estimation of MWP, a structural preference parameter, in absence of a full structural model. We hypothesize that the MWP for non-wage characteristics increases with wealth: a diminishing marginal utility of consumption will imply a reduction in the relative importance given to wages whilst non-wage characteristics gain in importance when choosing a job. Thus an individual's change in labour supply as a result of a change in wealth will depend on the balance of their job's wage and non-wage characteristics.Wealthier individuals are predicted to move away from jobs with poor non-wage characteristics. Since switching jobs takes time in a labour market with frictions, a change in preferences is best modelled as influencing workers' decisions to accept or reject job offers.
Instead of using wage differentials to identify the value of non-wage characteristics, differential job quitting can be exploited.By observing the relative importance of differences in non-wage characteristics vis-à-vis wages in determining job leaving, it is possible to estimate workers'marginal willingness to pay (MWP) for physical working conditions (Gronberg and Reed, 1994), commuting distance (van Ommeren et al., 2000) or the remaining duration of a contract (vanOmmeren and Hazans, 2008). The approach allows an estimation of MWP, a structural preference parameter, in absence of a full structural model. We hypothesize that the MWP for non-wage characteristics increases with wealth: a diminishing marginal utility of consumption will imply a reduction in the relative importance given to wages whilst non-wage characteristics gain in importance when choosing a job. Thus an individual's change in labour supply as a result of a change in wealth will depend on the balance of their job's wage and non-wage characteristics.Wealthier individuals are predicted to move away from jobs with poor non-wage characteristics. Since switching jobs takes time in a labour market with frictions, a change in preferences is best modelled as influencing workers' decisions to accept or reject job offers.
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