Fringe benefits and job satisfaction

Abstract

PurposeThe paper seeks to empirically identify the theoretically ambiguous relationship between employer fringe benefit provision and worker job satisfaction.Design/methodology/approachUsing the five most recent waves of the National Longitudinal Survey of Youth, both pooled cross‐section and fixed effects estimates explain the relationship between fringe benefits and job satisfaction. The potential endogenous relationship is also tested using a recursive bivariate probit procedure.FindingsFringe benefits are significant and positive determinants of job satisfaction. The potential endogeneity between fringe benefits and job satisfaction is not shown in this dataset while controlling for fixed effects does not remove the significant impact of fringe benefits.Research limitations/implicationsA limitation is the inability to control for total compensation within the estimations and control for wage changes as a result of fringe benefit provision.Practical implicationsHigher levels of worker job satisfaction, potentially resulting from fringe benefit provisions, have been linked to important productivity measures such as lower quit rates and absenteeism.Originality/valueThe paper is the first to study the relationship between fringe benefits and job satisfaction in detail while additionally testing for the endogeneity of the relationship and controlling for fixed effects.