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Income Inequality and Job Satisfaction of Full-Time Employees in Germany

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Author Info

  • Wunder, Christoph

    ()
    (University of Erlangen-Nuremberg)

  • Schwarze, Johannes

    (University of Bamberg)

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    Abstract

    Using data from the German Socio-Economic Panel Study (GSOEP), it is shown that income comparison with persons who are better off has a clear impact on the job satisfaction of West German full-time employees. Two contrary effects can be identified. On the one hand, there is an aversion to disadvantageous regional income inequality, while on the other hand, individuals prefer inequality within their occupational group. The two effects are interpreted as envy and an information (or “tunnel”) effect, respectively. The analysis of income comparison with persons who are worse off suggests a prestige effect. However, downward comparison is of minor importance for job satisfaction.

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    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2084.

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    Length: 26 pages
    Date of creation: Apr 2006
    Date of revision:
    Publication status: published in: Journal of Income Distribution, 2009, 18(2), 70-91
    Handle: RePEc:iza:izadps:dp2084

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    Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
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    Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
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    Related research

    Keywords: social comparison; German Socio-Economic Panel Study (GSOEP); prestige; envy; job satisfaction; income inequality; information effect (tunnel effect);

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    References

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    Cited by:
    1. Conchita D'Ambrosio & Joachim R. Frick, 2007. "Individual Well-Being in a Dynamic Perspective," Discussion Papers of DIW Berlin 673, DIW Berlin, German Institute for Economic Research.
    2. Poggi, Ambra, 2013. "Within-establishment wage inequality and satisfaction," Economics Discussion Papers 2013-28, Kiel Institute for the World Economy.

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