The relationship between work/family benefits and earnings: A test of competing predictions

Using data from a random statewide telephone survey, this study examines the relationship between four specific types of work/family benefits (child care, flextime, and two types of flexible leaves) and employee earnings. The research is guided by two competing theoretical perspectives. One-compensating wage differential theory-is based on the presumed cost of the benefits, and the other is based on their potential productivity enhancing effects. Despite the prevalence of the former perspective for guiding work on the impact of job characteristics on earnings, we found limited supporting evidence. Instead, earnings more closely related to work/family benefits were likely to have a positive impact on productivity, but only among those groups that stood the most to gain. Building on the findings of this study, suggestions are made to examine further how and in what ways this important new class of benefits might affect employee earnings.