The trend of fringe benefits as a percentage of total compensation can be partially explained by the fact that:
A)tax reform has rendered many types of fringe benefits fully taxable
B)"in-kind" benefits restrict workers' consumption choices
C)the firm may be able to purchase fringe benefits more cheaply than workers
D)many types of fringe benefits are income inelastic

Question

Quizplus · Accepted Answer

Firms may be able to purchase fringe benefits more cheaply than workers due to economies of scale or negotiations with suppliers, which means that offering fringe benefits as part of compensation can be a cost-effective strategy for the company. This can result in a higher percentage of compensation being allocated to fringe benefits.

The Trend of Fringe Benefits as a Percentage of Total