High-Pressure, High-Paying Jobs?

Abstract

Work-related stress has reportedly increased over time. Using worker-level survey and experimental data, we investigate the labor market consequences of work pressure. We build a measure of pressure strongly associated with adverse health outcomes and show that pressure comes with a sizable earnings premium, reflecting workers’ willingness-to-pay to avoid pressure. As expected, we do not find a premium among civil servants who face strong labor market frictions. Our experimental evidence is consistent with workers sorting into high-pressure jobs and with a sizable market-level compensating differential. Differences in the prevalence and valuation of work pressure explain substantial shares of wage inequality.