Within-establishment wage inequality and satisfaction
AbstractThe aim of this paper is to provide fresh empirical evidence of the mechanisms through which wage inequality affects worker satisfaction. Theoretically, wages of others may affect workers' utility for two main reasons: Workers may derive well-being from their social status (comparison hypothesis) and/or they may use others wages to help predict their own future wage (information hypothesis). Both hypotheses are tested. To achieve her aims, the author models individual utility from pay as a function of a worker's own wage and the earnings of all other workers within the same establishment, and she estimates the model using British employer-employee data. Incomplete information about others wages is assumed. The author finds that the comparison effects matter. Of most interest, she provides some first evidence about a positive relation between well-being and inequality. Her results are robust within the different specifications and different definitions of the reference group. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Economics Discussion Papers with number 2013-28.
Date of creation: 2013
Date of revision:
satisfaction; comparison income; co-workers; inequality; incomplete information;
Other versions of this item:
- Ambra Poggi, 2010. "Within-establishment wage inequality and satisfaction," LABORatorio R. Revelli Working Papers Series 100, LABORatorio R. Revelli, Centre for Employment Studies.
- 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
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-11 (All new papers)
- NEP-CTA-2013-05-11 (Contract Theory & Applications)
- NEP-LAB-2013-05-11 (Labour Economics)
- NEP-LMA-2013-05-11 (Labor Markets - Supply, Demand, & Wages)
- NEP-LTV-2013-05-11 (Unemployment, Inequality & Poverty)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 255-83, May.
- Ada Ferrer-i-Carbonell & Paul Frijters, 2002.
"How important is Methodology for the Estimates of the Determinants of Happiness?,"
Tinbergen Institute Discussion Papers
02-024/3, Tinbergen Institute.
- Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
- Stadt, H. van de & Geer, S.A. van de & Kapteyn, A.J., 1985.
"The relativity of utility: Evidence from panel data,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-364325, Tilburg University.
- van de Stadt, Huib & Kapteyn, Arie & van de Geer, Sara, 1985. "The Relativity of Utility: Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 179-87, May.
- Andrew E. Clark & Nicolai Kristensen & Niels Westergård-Nielsen, 2009.
"Economic Satisfaction and Income Rank in Small Neighbourhoods,"
Journal of the European Economic Association,
MIT Press, vol. 7(2-3), pages 519-527, 04-05.
- Clark, Andrew E. & Kristensen, Nicolai & Westergård-Nielsen, Niels C., 2008. "Economic Satisfaction and Income Rank in Small Neighbourhoods," IZA Discussion Papers 3813, Institute for the Study of Labor (IZA).
- Clark, Andrew E. & Kristensen, Nicolai & Westergaard-Nielsen, Niels, 2008. "Economic Satisfaction and Income Rank in Small Neighbourhoods," Working Papers 08-25, University of Aarhus, Aarhus School of Business, Department of Economics.
- Andrew E. Clark & Nicolai Kristensen & Niels Westergård-Nielsen, 2008. "Economic satisfaction and income rank in small neighbourhoods," PSE Working Papers halshs-00586254, HAL.
- Janiszewski, Chris & Lichtenstein, Donald R, 1999. " A Range Theory Account of Price Perception," Journal of Consumer Research, University of Chicago Press, vol. 25(4), pages 353-68, March.
- Seidl, Christian & Traub, Stefan & Morone, Andrea, 2003.
"Relative Deprivation, Personal Income Satisfaction, and Average Well-Being under Different Income Distributions,"
Economics Working Papers
2003,05, Christian-Albrechts-University of Kiel, Department of Economics.
- Christian Seidl & Stefan Traub & Andrea Morone, 2004. "Relative Deprivation, Personal Income Satisfaction, and Average Well-Being under Different Income Distributions," Experimental 0401004, EconWPA.
- Seidl, Christian & Traub, Stefan & Morone, Andrea, 2005. "Relative Deprivation, Personal Income Satisfaction, and Average Well-being under Different Income Distributions," Working Paper Series RP2005/04, World Institute for Development Economic Research (UNU-WIDER).
- Vendrik, Maarten & Woltjer, Geert, 2006. "Happiness and Loss Aversion: When Social Participation Dominates Comparison," IZA Discussion Papers 2218, Institute for the Study of Labor (IZA).
- Stutzer, Alois, 2004.
"The role of income aspirations in individual happiness,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 54(1), pages 89-109, May.
- Alois Stutzer, . "The Role of Income Aspirations in Individual Happiness," IEW - Working Papers 124, Institute for Empirical Research in Economics - University of Zurich.
- Rojas, Mariano, 2007. "Heterogeneity in the relationship between income and happiness: A conceptual-referent-theory explanation," Journal of Economic Psychology, Elsevier, vol. 28(1), pages 1-14, January.
- Robson, Arthur J, 1992. "Status, the Distribution of Wealth, Private and Social Attitudes to Risk," Econometrica, Econometric Society, vol. 60(4), pages 837-57, July.
- Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Econometric Society, vol. 47(2), pages 263-91, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Ernst Fehr & Klaus M. Schmidt, 1999.
"A Theory Of Fairness, Competition, And Cooperation,"
The Quarterly Journal of Economics,
MIT Press, vol. 114(3), pages 817-868, August.
- Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
- Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
- Blanchflower, David G. & Oswald, Andrew J., 2001.
"Well-Being Over Time in Britain and the USA,"
The Warwick Economics Research Paper Series (TWERPS)
616, University of Warwick, Department of Economics.
- P. J. Sloane & H. Williams, 2000. "Job Satisfaction, Comparison Earnings, and Gender," LABOUR, CEIS, vol. 14(3), pages 473-502, 09.
- Wunder, Christoph & Schwarze, Johannes, 2006. "Income Inequality and Job Satisfaction of Full-Time Employees in Germany," IZA Discussion Papers 2084, Institute for the Study of Labor (IZA).
- Layard, Richard, 1980. "Human Satisfactions and Public Policy," Economic Journal, Royal Economic Society, vol. 90(363), pages 737-50, December.
- M Patterson & P Warr & M West, 2004. "Organizational Climate and Company Productivity: the Role of Employee Affect and Employee Level," CEP Discussion Papers dp0626, Centre for Economic Performance, LSE.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.