Looking for jobs with good pay and good working conditions

In perfectly competitive labour markets, there is a market for non-material job amenities in which workers’ willingness to pay for these goods implies that workers accept compensating wage differentials, such that jobs with better working conditions should have lower wages. In labour market characterised by frictions, workers’ wages typically depend also on firm productivity. However many job characteristics with consumptive value also influence productivity, such that compensating differentials may not be apparent. Job characteristics that may influence productivity are considered here in a labour market with search frictions and different levels of worker ability. In this framework, compensating differentials may not be evident despite the fact that workers are willing to substitute better working conditions for lower pay. A method of empirical estimation is proposed based on subjective evaluation of working conditions, wage and labour market transition data. First results are presented, estimation is work in progress. JEL: J28, J31, J64, J81, M52