Who Gets and Who Gives Employer-Provided Benefits? Evidence from Matched Employer-Employee Data

Why are some workers employed in some workplaces more likely to acquire valued rewards in the form of employer-provided benefits? In this paper, I shed new light on the sources of benefits inequality by developing a structural, rent-based theory as a strategy for observing and explaining within-and between-workplace benefits inequality. I put forward rent extraction by powerful workers as a main causal mechanism that produces within-workplace variation; and workplaces' rent-sharing, attributable to firms with considerable resources and formalized organizations, as a mechanism that generates between-workplace variation. I test this theoretical model and the "linkedness" of the two mechanisms by analyzing Israeli matched employer-employee register data. I find that workers with greater bargaining power for rent extraction (i.e., full-time full-year (FTFY), service-class occupations) are more likely to obtain valued benefits within workplaces. Also large-scale, large-size firms and formalized workplaces (i.e., state-owned and public organizations and older organizations) are more likely to share their rent by providing valued benefits to all their workers, FTFY workers and service-class employees in particular. I conclude that benefits exacerbate the disparities arising from wages-except for women, who have higher odds of obtaining valued benefits than comparable men; implicitly, women have an unmeasured preference for benefits.