High-Pressure, High-Paying Jobs?

Work-related stress has reportedly increased over time. Using worker-level survey data, we build a measure of work pressure strongly associated with adverse health outcomes. In line with theories of compensating differentials, work pressure comes with a sizable earnings premium, even within narrowly defined occupations. As expected, we find no premium among civil servants who face strong labor market frictions. In complementary stated-choice experiments, we uncover a substantial willingness-to-pay to avoid work pressure. Our evidence is consistent with workers sorting into high- and low-pressure jobs. Differences in the prevalence and valuation of work pressure explain a substantial share of wage inequality.