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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

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: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse1_2003.pdf
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Bibliographic 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

Contact details of provider:
Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 6884
Web page: http://www.bgse.uni-bonn.de

Related research

Keywords: Job satisfaction; Wage increases; Habit formation; Wage profiles; Relative utility;

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References

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  15. 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.
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Citations

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Cited by:
  1. Delfgaauw, Josse, 2007. "The effect of job satisfaction on job search: Not just whether, but also where," Labour Economics, Elsevier, vol. 14(3), pages 299-317, June.
  2. Grund, Christian & Sliwka, Dirk, 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).
  3. repec:hal:wpaper:halshs-00590436 is not listed on IDEAS
  4. Verme, Paolo, 2013. "The relative income and relative deprivation hypotheses : a review of the empirical literature," Policy Research Working Paper Series 6606, The World Bank.
  5. repec:hal:wpaper:halshs-00588314 is not listed on IDEAS
  6. Claudia Senik & Andrew E. Clark, 2007. "La croissance rend-elle heureux ? La réponse des données subjectives," PSE Working Papers halshs-00588314, HAL.

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