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Estimates of the effect of wages on job satisfaction

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  • Lydon, Reamonn
  • Chevalier, Arnaud

Abstract

Empirical studies on job satisfaction have relied on two hypotheses: firstly, that wages are exogenous in a job satisfaction regression and secondly, that appropriate measures of relative wage can be inferred. In this paper we test both assumptions using two cohorts of UK university graduates. We find that controlling for endogeneity, the direct wage effect on job satisfaction doubles. Several variables relating to job match quality also impact on job satisfaction. Graduates who get good degrees report higher levels of job satisfaction, as do graduates who spend a significant amount of time in job search. Finally we show that future wage expectations and career aspirations have a significant effect on job satisfaction and provide better fit than some ad-hoc measures of relative wage.

Suggested Citation

  • Lydon, Reamonn & Chevalier, Arnaud, 2002. "Estimates of the effect of wages on job satisfaction," LSE Research Online Documents on Economics 20081, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:20081
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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