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Job Satisfaction and Co-worker Wages: Status or Signal?

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Author Info
Andrew E. Clark () (Paris School of Economics, CCP, Aarhus School of Business and IZA)
Nicolai Kristensen () (Aarhus School of Business, CIM and CCP)
Niels Westergård-Nielsen () (Aarhus School of Business, CCP and IZA)

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Abstract

This paper uses matched employer-employee panel data to show that individual job satisfaction is higher when other workers in the same establishment are better-paid. This runs contrary to a large literature which has found evidence of income comparisons in subjective well-being. We argue that the difference hinges on the nature of the reference group. We here use co-workers. Their wages not only induce jealousy, but also provide a signal about the worker’s own future earnings. Our positive estimated coefficient on others’ wages shows that this positive future earnings signal outweighs any negative status effect. This phenomenon is stronger for men, and in the private sector.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3073.

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Length: 30 pages
Date of creation: Sep 2007
Date of revision:
Handle: RePEc:iza:izadps:dp3073

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Related research
Keywords: job satisfaction; co-workers; comparison income; wage expectations; tournaments;

Other versions of this item:

Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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  1. Andrew E. Clark, 2008. "Happiness, habits and high rank: Comparisons in economic and social life," PSE Working Papers 2008-61, PSE (Ecole normale supérieure). [Downloadable!]
  2. Böckerman, Petri & Ilmakunnas, Pekka & Johansson , Edvard, 2009. "Creative destruction and employee well-being," MPRA Paper 15447, University Library of Munich, Germany. [Downloadable!]
  3. Andrew E. Clark & Claudia Senik, 2008. "Who compares to whom? The anatomy of income comparisons in Europe," PSE Working Papers 2008-65, PSE (Ecole normale supérieure), revised Sep 2009. [Downloadable!]
    Other versions:
  4. Yamamura, Eiji, 2009. "Trial experience, satisfaction and incentive to bring another lawsuit: Does aspiration level influence winners and losers?," MPRA Paper 16149, University Library of Munich, Germany. [Downloadable!]
  5. Andrew E. Clark & Andreas Knabe & Steffen Rätzel, 2008. "Boon or Bane? Others' unemployment, well-being and job insecurity," PSE Working Papers 2008-67, PSE (Ecole normale supérieure). [Downloadable!]
    Other versions:
  6. 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!]
  7. Wenshu Gao & Russell Smyth, 2009. "Job Satisfaction And Relative Income In Economic Transition: Status Or Signal? The Case Of Urban China," Development Research Unit Working Paper Series 12-09, Monash University, Department of Economics. [Downloadable!]
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This page was last updated on 2009-11-23.

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