The Importance of Pecuniary and Non-Pecuniary Rewards in Job Choice
Melbourne Institute Working Paper No. 18/01
Date: December 2001
A positive correlation between pecuniary and non-pecuniary job returns does not necessarily invalidate Adam Smiths thesis about compensating wage differentials. Compensation should still occur within a given set of job opportunities for each individual. This paper tests empirically a model that distinguishes between factors which affect the number and types of potential jobs open to a person, and, preferences which determine the ultimate choice from these options. It was found that women, especially women with children under 18 years of age, people who are more religious and people from English speaking backgrounds appear to value non-pecuniary job advantages more highly than other groups, ceteris paribus. Other labour market characteristics, such as further schooling, and maturity appear to make people select pecuniary job rewards over intrinsic satisfaction.