Non-wage characteristics and the case of the missing margin

Job search models typically describe jobs solely in terms of wages, but empirical evidence suggests non-wage characteristics are an important determinant of job choice. For instance, workers in the NLSY79 report moving from a higher paying job to a lower paying job in 33% of voluntary job-to-job transitions. I estimate an equilibrium-based job search model that accounts for hiring wages, on-the-job wage growth, non-wage job characteristics and measurement error in wages. This model provides the first known estimate of the cumulative importance of all non-wage characteristics in job market decisions. I find that non-wage characteristics are a more important determinant of job choices than hiring wages.;I use the model and estimated parameters to measure how workers value the better non-wage characteristics and on-the-job wage growth potential that result when unemployment insurance enables them to search longer. Accounting for these previously unmeasured benefits roughly triples my estimate of the program's value to workers. These results suggest an important role for non-wage characteristics in other applications throughout labor economics.