Cost of Cash: Evidence from Cashiers

An important but overlooked cost of payments in retailing is the cost on checkout cashiers. This paper examines the compensating wage differential that cashiers require to handle payments in cash. First, a multicountry panel data study shows that cashier wages increase with retail cash usage, which is consistent with cashiers requiring compensation to handle cash. Second, in a discrete choice experiment where supermarket cashiers chose between collecting card and cash payments, eight of 10 cashiers preferred card to cash. Among those who preferred card, the median cashier required a wage premium of S$37.50 (US$27) a month to handle cash. The premium was lower among cashiers who are local, less risk averse, and younger. Third, in a laboratory study, subjects traded off earnings against stress. With higher frequency of cash payments, high earners experienced greater physiological stress than low earners. Earnings also increased with abilities in arithmetic and coping with stress. Collectively, these studies show that cashiers require higher wages to handle cash payments, in part due to higher stress. We offer policy, managerial, and research implications for job design, payment systems, and workplace stress.

Meta-analysis of Value of Statistical Life Estimates

Value of Statistical Life (VSL) is one of the most debatable areas in economics. However, VSL is frequently used as a policy instrument for evaluating various safety, health and environmental regulations. Policymakers have to undertake the difficult task of assigning monetary value to the reduction of various health and mortality risks while analyzing safety policies. Compensating wage differential (CWD) for job risks acts as a reference point for valuing mortality risks while VSL serves as a basis to analyze these benefits of risk reduction policies. However, it has been observed in the recent past that VSL estimates vary substantially across various studies. Therefore, it has become necessary for researchers and policymakers to understand the source of this variation in order to aid policymaking. This paper attempts to bring together some of the emerging issues in VSL literature and presents a meta-analysis that is based on 34 observations from 30 hedonic wage-based VSL studies. The results of this meta-analysis show that certain emerging areas in VSL literature such as worker’s compensation benefits, age and long-term health-related job risk require more emphasis and further examination.

Compensating Differentials for Sexual Harassment

Workplace sexual harassment is illegal, but many workers report that they have been sexually harassed. Exposure to the risk of sexual harassment may decrease productivity, which would reduce wages. Alternatively, workers may receive a compensating differential for exposure to sexual harassment, which would increase wages. Data on claims of sexual harassment filed with the Equal Employment Opportunity Commission are used to calculate the first measures of sexual harassment risks by industry, age group, and sex. Female workers face far higher sexual harassment risks. On balance, workers receive a compensating wage differential for exposure to the risk of sexual harassment.

Useful Additional Evaluation Measures

ABSTRACT: Performance evaluation with multiple tasks and multiple measures has been explored in a variety of settings. Yet, the efficient design of a portfolio of performance measures remains opaque, largely because of the multidimensional nature of the exercise. Here we focus on the value of adding measures to an existing portfolio of measures in a multi-task LEN style agency model. We offer an algebraic decomposition that projects the gain from a set of additional performance measures into “distance” and “risk” components. The distance component comports with task balance and intensity issues and the risk component with the inevitable risk sharing or compensating wage differential issue.

Estimating Compensating Wage Differentials Using Voluntary Job Changes: Evidence from Germany

The author develops a model predicting that in a labor market that attaches a wage premium to jobs with a disamenity (a compensating wage differential), the premium's upper bound will be defined by the average wage change of voluntary job movers whose consumption of the disamenity rises as a result of their move; its lower bound, by the wage change of those whose consumption of the disamenity falls. These predictions will not hold if, as predicted by a “segmented” labor market model, the labor market attaches a wage penalty to workplace disamenities. Using longitudinal data on job characteristics and wages in Germany in 1984–2001, the author estimates the market returns to four workplace disamenities: heavy workload, job insecurity, poor hours regulation, and a mismatch between skills possessed and skills required. The results broadly support the existence of compensating differentials in the German labor market.