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Labor Supply and Productivity Responses to Non-Salary Benefits: Do They Work? If So, at What Level Do They Work Best?

Author

Listed:
  • Spencer, Marilyn

    (Texas A&M University Corpus Christi)

  • Gevrek, Deniz

    (Texas A&M University Corpus Christi)

  • Chambers, Valrie

    (Stetson University)

  • Bowden, Randall

    (Texas A&M University Corpus Christi)

Abstract

This study explores the impact of a particular low marginal-cost employee benefit on employees' intended retention and performance. By utilizing a unique data set constructed by surveying full-time faculty and staff members at a public university in the United States, we study the impact of this employee benefit on faculty and staff performance and retention. We focus on the impact of reduction in dependent college tuition at various levels on employees' intentions to work harder and stay at their current job by using both OLS and Ordered Probit models. We also simulate the direct opportunity cost (reduction in revenue) in dollars and as a percent of total budgeted revenue to facilitate administrative decision making. The results provide evidence that for institutions where employee retention and productivity are a priority, maximizing or offering dependent college tuition waiver may be a relatively low-cost benefit to increase intended retention and productivity. In addition, the amount of the tuition waiver, number of dependents and annual salary are statistically significant predictors of intended increased productivity and intent to stay employed at the current institution. Employee retention and productivity is a challenge for all organizations. Although pay, benefits, and organizational culture tend to be key indicators of job satisfaction, little attention is given to specific types of benefits. This study is the first comprehensive attempt to explore the relationship between the impact of this low-cost employee benefit and employee performance and retention in a higher education institution in the United States.

Suggested Citation

  • Spencer, Marilyn & Gevrek, Deniz & Chambers, Valrie & Bowden, Randall, 2015. "Labor Supply and Productivity Responses to Non-Salary Benefits: Do They Work? If So, at What Level Do They Work Best?," IZA Discussion Papers 9153, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp9153
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    References listed on IDEAS

    as
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    3. Zhang, Liang & Liu, Xiangmin, 2010. "Faculty employment at 4-year colleges and universities," Economics of Education Review, Elsevier, vol. 29(4), pages 543-552, August.
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    6. Colleen N. Flaherty, 2007. "The Effect of Tuition Reimbursement on Turnover: A Case Study Analysis," NBER Working Papers 12975, National Bureau of Economic Research, Inc.
    7. Barry Bozeman & Monica Gaughan, 2011. "Job Satisfaction among University Faculty: Individual, Work, and Institutional Determinants," The Journal of Higher Education, Taylor & Francis Journals, vol. 82(2), pages 154-186, March.
    8. ., 2012. "Efficient Structure of Exchange," Chapters, in: Why is there Money?, chapter 9, Edward Elgar Publishing.
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    More about this item

    Keywords

    productivity; employee satisfaction; retention; higher education; job satisfaction; fringe benefits;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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