The Distribution of Non-Wage Benefits: Maternity Benefits and Gender Diversity

Friday July 26, 2019
  • Peer Reviewed Scholarly Article

Why do firms offer non-wage compensation instead of the equivalent amount in financial compensation? We argue that firms use non-wage benefits, specifically maternity leave, to efficiently target workers with desirable characteristics. Using Glassdoor data, we show that firms offer higher quality maternity benefits in industries and locations where female talent is relatively scarce — a relationship robust to an instrumental variable analysis. Second, using plausibly exogenous variation in the timing of government policy, we show that these benefits can increase firm value. Third, we document novel stylized facts about non-wage benefits and how they are correlated with firm characteristics.

Authors

Tim Liu, UNC Kenan-Flagler
Christos Makridis, MIT Sloan School of Management
Paige Ouimet, UNC Kenan-Flagler
Elena Simintzi, UNC Kenan-Flagler and the Centre for Economic Policy Research