The effect of status on firm choice: An investigation into the effect of status on wage and firm choice

There are significant wage differences for academic starters on the labour market between firms that are offering similar jobs. Some people say that reputation of the firm and that status acquisition are important for the candidate employees to choose for a particular firm. This thesis focuses on the issue whether social status has an influence on the firm choice decision of candidate employees. In the theoretical model social status is seen as a good produced by the firm that is observed and assessed by the candidate employees. The social status is compared with the social status of the other firms in the market and appreciated as utility by the workers. The candidate employees are heterogeneous in their susceptibility for social status. The model shows that some employees accept a lower wage for the same job if they are compensated with a higher level of social status. This is tested empirically by assessing the strategy of the firms. The strategy was deducted from the recruitment activities of the firms. The test results are not in line with the theoretical predictions of the model.