Keeping up with the Joneses by finding a better-paid job - The effect of relative income on job mobility
AbstractIt has been shown that a person’s relative income – compared to a reference group – has a negative impact on self-reported happiness. This suggests that people who aim at increasing their happiness should try to find a better-paid job if their relative income is low. In this paper we study this hypothesis by estimating the effect of relative income on job mobility, using a dataset containing information on roughly four million Dutch employees. We consider three different reference groups: people who live in the same neighborhood, people who work for the same employer, and people who share certain demographic characteristics. Our findings suggest that workers compare their own income to that of their neighbors, and low relative income is associated with higher job mobility. We conclude that low relative income (compared to the neighbors) reduces workers’ happiness, and workers react to this by finding a new job which may offer the prospect of higher pay.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 29426.
Date of creation: 08 Mar 2011
Date of revision:
Relative income; job mobility; happiness; social status;
Other versions of this item:
- Kristin Kronenberg & Tobias Kronenberg, 2011. "Keeping up with the Joneses by finding a better-paid job - The effect of relative income on job mobility," ERSA conference papers ersa11p1445, European Regional Science Association.
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
- D10 - Microeconomics - - Household Behavior - - - General
- R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-19 (All new papers)
- NEP-HAP-2011-03-19 (Economics of Happiness)
- NEP-LAB-2011-03-19 (Labour Economics)
- NEP-SOC-2011-03-19 (Social Norms & Social Capital)
- NEP-URE-2011-03-19 (Urban & Real Estate Economics)
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