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Money wages now compose 85% of compensation whereas only 50 years ago they composed almost 100% of compensation. On the other hand, private wage supplements, and fringe benefits such as pensions, health and accident insurance and various benefit funds have grown rapidly during the last half century. The result of this growth is that supplements now make up an important portion of compensation. The increase in supplement expenditures resulted in a diverse distribution of supplements among industries and firms. Recognizing the inherent simultaneity in the problem, this paper seeks to explain the determination of these cross-sectional variations in supplement expenditures. In identifying the determinants of supplement expenditures the validity of the assumption (often invoked by researchers) that wage supplements are paid in fixed proportion to money wages with the constant of proportionality …