Adam was being Smithily rhetorical when he declared that all jobs pay the same. Today we’d argue that it’s jobs requiring the same sort of skills, training, commitment, which all pay the same even if wages vary wildly. And even then we’d not really be insisting upon exact equivalence.
Yet there is also great explanatory power to the insistence. Some large portion of people simply wouldn’t work in finance at all – that being a good reason why finance jobs are highly paid, to get people to go do those boring or unfashionable jobs. Loads and loads of people would like to strut the stage as actors, which is why near all actors never make a single penny from doing so.
Total compensation is the same across jobs, wages varying with how noisesome the job is.
Now we’ve some nice empirical evidence of the contention:
If consumption and non-wage amenities of work enter utility, holding few assets may induce a trade-off between wages and amenities when searching for a job. We establish this in a model of search with asset accumulation, extended to accommodate amenities. We then provide empirical evidence of this trade-off in the context of student debt, finding that higher debt causes graduates to accept jobs with higher wages and lower job satisfaction. In a representative sample of college graduates, we infer causality by exploiting within-college, across cohort changes in financial aid. A quantitative extension of our theoretical framework that explicitly models student debt accounts well for our empirical results. Identifying the utility value of amenities through observed search behavior, we find that high satisfaction jobs are valued at 6 percent of lifetime consumption relative to low satisfaction jobs. This trade-off is economically significant; a policy maker using only wage data to assess the welfare effects of with an income-based repayment policy would mistakenly conclude that graduates prefer a fixed repayment policy.
So, why do CEOs get lots of money? Because it’s a shit job but someone has to do it….