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"The Further We Stretch the Higher the Sky" - On the Impact of Wage Increases on Job Satisfaction

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Author Info
Christian Grund
Dirk Sliwka

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Abstract

The impact of wage increases on job satisfaction is explored. First, it is empirically confirmed that current job satisfaction rises with the absolute wage level as well as with wage increases. Second, a basic job satisfaction function is constructed based on the empirical results, and theoretical implications are analyzed. Myopic maximization of such a function directly implies increasing and concave shaped wage profiles. It is shown that employees get unhappier over time staying on a certain job although wages increase, which again is empirically confirmed.

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File URL: ftp://web.bgse.uni-bonn.de/pub/RePEc/bon/bonedp/bgse1_2003.pdf
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Publisher Info
Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse1_2003.

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Length: 25
Date of creation: Jan 2003
Date of revision:
Handle: RePEc:bon:bonedp:bgse1_2003

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Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 9221
Web page: http://www.bgse.uni-bonn.de/index.php?id=494

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Related research
Keywords: Job satisfaction Wage increases Habit formation Wage profiles Relative utility

Find related papers by JEL classification:
M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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    Other versions:
  14. Pierre-Andre Chiappori & Bernard Salanie & Julie Valentin, 1999. "Early Starters versus Late Beginners," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 731-760, August. [Downloadable!] (restricted)
    Other versions:
  15. Constantinides, George M, 1990. "Habit Formation: A Resolution of the Equity Premium Puzzle," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 519-43, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Tania Burchardt, 2004. "One mans rags are another mans riches: Identifying adaptive preferences using panel data," CASE Papers 086, Centre for Analysis of Social Exclusion, LSE. [Downloadable!]
  2. Christian Grund & Dirk Sliwka, 2005. "Reference Dependent Preferences and the Impact of Wage Increases on Job Satisfaction: Theory and Evidence," IZA Discussion Papers 1879, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Andrew E. Clark & Claudia Senik, 2007. "La croissance rend-elle heureux ? La réponse des données subjectives," PSE Working Papers 2007-06, PSE (Ecole normale supérieure). [Downloadable!]
  4. Josse Delfgaauw, 2005. "The Effect of Job Satisfaction on Job Search: Not just whether, but also where," Tinbergen Institute Discussion Papers 05-097/1, Tinbergen Institute. [Downloadable!]
    Other versions:
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