NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Estimating Wage-Fringe Trade-Offs: Some Data Problems

Robert S. Smith, Ronald G. Ehrenberg

NBER Working Paper No. 827
Issued in December 1981
NBER Program(s):   LS

Our paper attempts to identify the types of data nee3ed to estimate tradeoffs between wages and fringe benefits (such as pensions); it also explores the usefulness for this estimation of one particular employer- based data set collected by gay Associates. We stress three things: first, that employer-based data sets are required. Second, because pensions and many other fringe benefits are actuarial functions of wages or salaries, these technical relationships must be accounted for in estimation. Third, to take account of unobservable heterogeneity of employees across employers, one must use econometric methods that control for these unobservable variables. The paper concludes with a discussion of our attempts to estimate the tradeoff between wages and fringe benefits using a unique database for 200 establishments that contains information on wages and actuarial valuations of employer costs of fringe benefits at three different job levels.

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Document Object Identifier (DOI): 10.3386/w0827

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