From Wallets to Wages: Consumer Income, Job Design, and Pay Disparities

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.

Name thesis:degree_name

Master

Department dc:contributor.department

Sloan School of Management

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2025

Author dc:creator

• Roh, Soohyun

Advisor dc:contributor.advisor

• Wilmers, Nathan

Statement dc:rights

• In Copyright - Educational Use Permitted
• Copyright retained by author(s)

Licence dc:rights.uri

• https://rightsstatements.org/page/InC-EDU/1.0/

Handle dc:identifier.uri

https://hdl.handle.net/1721.1/164558

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/164558