Sorting and wage premiums in immoral work

Abstract

We use surveys, laboratory experiments and administrative data to study how heterogeneity in the perceived immorality of work and in workers’ aversion to acting immorally impact labor market outcomes. Immoral work is associated with higher wages, both in administrative data and in causal evidence from a laboratory experiment. Using distinct individual measures, we show that those who find immoral behavior least aversive are more likely to be employed in immoral work in the laboratory and exhibit a relative preference for work in sectors perceived as immoral. Such sorting may impact society through the resulting workforce composition across firms and sectors.