Buying Attributes

In this working paper, Sherwin Rosen suggests that workers purchase non-pecuniary attributes when they agree to be hired.

II. The Theory of Equalizing Differences
The theory of equalizing differences is fundamentally a theory of valuation of job attributes. In this account I specialize the job attribute to a consumption item, so the problem is basically one of a tie—in in which the worker sells the services of his labor but simultaneously purchases the characteristics of his job, viewed as on—the—job consumption. In this model work attributes are fixed for a given work situation, but vary from job to job. The basic problem is to match each worker’s preferences for on—the—job consumption versus market consumption to the proper work attribute; that is to say, to assign each worker to a firm which offers the desired job characteristics.


The first non-pecuniary attribute used as an example is dirty versus clean work- meaning the environment of the workplace. The next centers around safety. The next equal treatment dispite racial background. Of course education lines up with this set. Workers are paying for a menu of public goods.