Valuing business impacts in the areas of wage inequality and employee well-being

This working paper proposes a methodology to monetise five aspects of employee well-being (wage inequality, being employed, excess working hours, relationships with management and job security) using theoretical and empirical frameworks drawn from welfare economics. Preliminary results highlight a large loss of welfare arising from within-firm wage inequality as well as a strong impact of working conditions on workers’ well-being. On the aggregate, suppressing the negative externalities of the firm linked to excess working hours, tensions with management and job insecurity would yield an increase in social welfare equivalent to a 25% increase in household income, representing many years of economic growth. Greater transparency on company wage distributions and working conditions is necessary to apply these methodologies to real firms.