INTRODUCTION Economists generally measure an employee's compensation by money wages. But money wages alone may be an inadequate measure of labor compensation in, for example, studies of gender wage differentials as they omit fringe benefits. Ignoring fringe benefits in the analyses may lead to misjudgments regarding the extent of discrimination. Why are fringe benefits omitted from the earnings equation? They are often left out due to lack of data, or because it is thought that they make up only a small part of total compensation, in which case the analytical results would be unchanged. There are numerous studies ofmale-female earnings differentials, but only a handful have analyzed the role of fringe benefits in these differences: see, for example, Leibowitz (1983); Stahlberg (1990); Knudsen (1991); and Currie (1993). My earlier research results (Granqvist 1994) suggest that the sex of the employee is a variable that contributes to explaining the incidence of fringe benefits.