"Wage Differentials and the Price of Workplace Flexibility" - Neil Thakral, Brown University

Date
Nov 14, 1:20 pm2:35 pm
Location
Julis Romo Rabinowitz Building, Rm 217
Event Description

Neil Thakral is a visiting Assistant Professor of International and Public Affairs and Economics at Princeton University, in the Industrial Relations Section. Neil's research focuses on Behavioral economics, Housing policy, and Labor markets.  

Abstract

Workplace flexibility tends to interact with production processes that utilize labor inputs at different skill levels. When firms’ implicit costs of providing an amenity depend on worker skills, compensating price differentials can vary across the wage distribution and provides a novel channel for understanding the sources of wage inequality. The difficulty of estimating equilibrium amenity prices stems from the unobservability of worker ability and preferences. In a model that incorporates differences in firms’ costs of providing amenities to workers of different skill levels, directly measuring worker preferences makes it possible to estimate amenity prices as a function of worker types. We use a Bayesian Adaptive Choice Experiment (BACE) to collect individual-level data on the willingness to pay for different forms of workplace flexibility, along with wages and work arrangements. Workers along the earnings distribution value flexibility similarly on average, but high-earnings workers tend to have flexible location and flexible schedule, and low-earnings workers tend to have the option to work reduced hours. The model captures these key patterns, and we use the estimates to explore the welfare consequences of workers facing different amenity prices.