Working Paper

How amenities affect job and wage choices over the life cycle

Abstract: The current wage at a job may not fully reflect the \"value\" of that job. For example, a job with a low starting wage may be preferred to one with a high starting wage if the growth rate of wages is higher in the former than in the latter. In fact, differences in wage growth can potentially explain why a worker might want to quit a high-paying job for one with a lower starting wage. Job amenities are another important factor that not only influences the value of a job but also provides an independent rationale for why workers change jobs. Including a job's amenities as part of its \"value\" can also generate a move from high-paying to low-paying jobs (or vice versa) as part of an optimal consumption plan over the life cycle. Both the direction of movement and the timing of a job change depend critically on the relationship between a worker's rate of time preference and the market interest rate.

Keywords: Job satisfaction; Wages; Employment (Economic theory);

https://doi.org/10.26509/frbc-wp-200302

Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Working Papers (Old Series)

Publication Date: 2003

Number: 0302