From Wallets to Wages: Consumer Income, Job Design, and Pay Disparities
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Roh-rohs-SMMR-Management-2025-thesis.pdf
Description
Thesis PDF
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611.27 KB
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Adobe PDF
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82bec6663087effa522e6c2d1f72ae13
Author(s)
Roh, Soohyun
Advisor(s)
Wilmers, Nathan
Date Issued
September 2025
Publisher
Massachusetts Institute of Technology
Abstract
Pay differences between organizations are a key source of wage inequality. I propose a novel account of these differences by starting from the consumers that these businesses serve. Firms that serve high-income consumers specialize jobs into higher-paying and higher-skilled positions focused on quality, while those that serve lower-income consumers emphasize cost minimization by requiring workers to perform a wider range of general tasks. Matching consumer foot traffic data and establishment-level wage records, I find that establishments serving higher-income consumers pay their workers more. This effect holds comparing among establishments in the same neighborhoods and industries. Longitudinally, establishments increase wages when they shift toward higher-income customers. Analysis of online job postings further reveals that jobs at higher-income-serving firms involve a narrower set of tasks that command higher market value. These findings show how consumer markets shape firms’ internal job design and contribute to pay inequality across organizations.
MIT Department
Sloan School of Management
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