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How's the Job? Well-Being and Social Capital in the Workplace

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  • John F. Heliwell
  • Haifang Huang

Abstract

This paper takes a different tack in addressing one of the fundamental questions in economics: what are the factors that determine the distribution of jobs and wages? In Adam Smith%u2019s classic formulation, and in much of the subsequent literature, wage levels have been used to estimate the values of job characteristics ("compensating" or "equalizing" differentials). There are econometric problems with this approach, principally caused by unmeasured differences in talents and aptitudes that enable people of high ability to have jobs with both high wages and good working conditions, thus understating the value of working conditions. We bypass this difficulty by estimating the extent to which incomes and job characteristics influence direct measures of life satisfaction from three large and recent Canadian surveys. The well-being results show strikingly large values for non-financial job characteristics, especially workplace trust and other measures of the quality of workplace social capital. The compensating differentials estimated for the quality of workplace social capital are so large as to suggest that they do not reflect a full equilibrium. Thus the current situation probably reflects the existence of unrecognized opportunities for managers and employees to alter workplace environments, or for workers to change jobs, so as to increase both life satisfaction and workplace efficiency.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11759.

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Date of creation: Nov 2005
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Publication status: published as John F. Helliwell & Haifang Huang, 2010. "How’s the Job? Well-Being and Social Capital in the Workplace," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 63(2), pages 205-227, January.
Handle: RePEc:nbr:nberwo:11759

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  1. Garen, John, 1988. "Compensating Wage Differentials and the Endogeneity of Job Riskiness," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 9-16, February.
  2. Geeta Kingdon & John Knight, 2004. "Community, Comparisons and Subjective Well-being in a Divided Society," Development and Comp Systems 0409067, EconWPA.
  3. Cousineau, Jean-Michel & Lacroix, Robert & Girard, Anne-Marie, 1992. "Occupational Hazard and Wage Compensating Differentials," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 166-69, February.
  4. Brown, Charles, 1980. "Equalizing Differences in the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 94(1), pages 113-34, February.
  5. Morley Gunderson & Douglas Hyatt, 2001. "Workplace risks and wages: Canadian evidence from alternative models," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 377-395, May.
  6. Frank, Robert H, 1997. "The Frame of Reference as a Public Good," Economic Journal, Royal Economic Society, vol. 107(445), pages 1832-47, November.
  7. Ronald Meng, 1989. "Compensating Differences in the Canadian Labour Market," Canadian Journal of Economics, Canadian Economics Association, vol. 22(2), pages 413-24, May.
  8. Andrew E. Clark and Andrew J. Oswald, . "Satisfaction and Comparison Income," Economics Discussion Papers 419, University of Essex, Department of Economics.
  9. Dickens, William T, 1984. "Differences between Risk Premiums in Union and Nonunion Wages and the Case for Occupational Safety Regulation," American Economic Review, American Economic Association, vol. 74(2), pages 320-23, May.
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