1887

OECD Papers on Well-being and Inequalities

This series features working papers on the measurement agenda for well-being, inclusion, sustainability and equal opportunity as well as papers seeking to deepen the understanding of the drivers of these issues, the ways in which they interact and how they evolve. These papers are prepared by OECD staff, external experts or by outside consultants working on OECD projects.

English

Valuing business impacts in the areas of wage inequality and employee well-being

This working paper proposes a methodology to monetise five aspects of employee well-being (wage inequality, being employed, excess working hours, relationships with management and job security) using theoretical and empirical frameworks drawn from welfare economics. Preliminary results highlight a large loss of welfare arising from within-firm wage inequality as well as a strong impact of working conditions on workers’ well-being. On the aggregate, suppressing the negative externalities of the firm linked to excess working hours, tensions with management and job insecurity would yield an increase in social welfare equivalent to a 25% increase in household income, representing many years of economic growth. Greater transparency on company wage distributions and working conditions is necessary to apply these methodologies to real firms.

English

Keywords: working conditions, monetary valuation, Wage inequality, employee well-being
JEL: J31: Labor and Demographic Economics / Wages, Compensation, and Labor Costs / Wage Level and Structure; Wage Differentials; I31: Health, Education, and Welfare / Welfare, Well-Being, and Poverty / General Welfare; Well-Being; M52: Business Administration and Business Economics; Marketing; Accounting; Personnel Economics / Personnel Economics / Personnel Economics: Compensation and Compensation Methods and Their Effects; J81: Labor and Demographic Economics / Labor Standards: National and International / Labor Standards: Working Conditions
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