Скачать или смотреть The Economics of Employee Benefits

Total compensation includes both cash and benefits, which make up its extrinsic component. Although cash-only pay may seem simpler and more flexible, employers still offer benefits for strategic reasons. Employees could use extra cash to purchase their own insurance or save, but employer-provided benefits often come at a lower cost. Employers can access cost advantages by purchasing benefits (like insurance) more cheaply than employees could on their own.

Adverse selection in insurance markets makes individual coverage inefficient; group plans help mitigate this risk by requiring participation from all employees. Group coverage avoids pricing based on individual health risks and enables fairer premiums across the employee base. Larger groups reduce per-person administrative costs due to economies of scale, making benefits more efficient to manage. Benefits can help employers attract and retain workers by appealing to employee preferences that reveal traits like commitment and long-term interest.

Offering a mix of cash and benefits can signal company values and help identify applicants with desired work habits or goals. The U.S. tax code incentivizes employers to offer benefits by allowing favorable tax treatment for certain offerings.