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Fringe benefits and job satisfaction

  • Benjamin Artz
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    Purpose – The paper seeks to empirically identify the theoretically ambiguous relationship between employer fringe benefit provision and worker job satisfaction. Design/methodology/approach – Using the five most recent waves of the National Longitudinal Survey of Youth, both pooled cross-section and fixed effects estimates explain the relationship between fringe benefits and job satisfaction. The potential endogenous relationship is also tested using a recursive bivariate probit procedure. Findings – Fringe benefits are significant and positive determinants of job satisfaction. The potential endogeneity between fringe benefits and job satisfaction is not shown in this dataset while controlling for fixed effects does not remove the significant impact of fringe benefits. Research limitations/implications – A limitation is the inability to control for total compensation within the estimations and control for wage changes as a result of fringe benefit provision. Practical implications – Higher levels of worker job satisfaction, potentially resulting from fringe benefit provisions, have been linked to important productivity measures such as lower quit rates and absenteeism. Originality/value – The paper is the first to study the relationship between fringe benefits and job satisfaction in detail while additionally testing for the endogeneity of the relationship and controlling for fixed effects.

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    Article provided by Emerald Group Publishing in its journal International Journal of Manpower.

    Volume (Year): 31 (2010)
    Issue (Month): 6 (September)
    Pages: 626-644

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    Handle: RePEc:eme:ijmpps:v:31:y:2010:i:6:p:626-644
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    1. Weiss, Andrew, 1984. "Determinants of Quit Behavior," Journal of Labor Economics, University of Chicago Press, vol. 2(3), pages 371-87, July.
    2. Pouliakas, Konstantinos & Theodossiou, Ioannis, 2009. "Confronting Objections to Performance Pay: A Study of the Impact of Individual and Gain-sharing Incentives on the Job Satisfaction of British Employees," MPRA Paper 14244, University Library of Munich, Germany.
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    4. Richard B. Freeman, 1977. "Job Satisfaction as an Economic Variable," NBER Working Papers 0225, National Bureau of Economic Research, Inc.
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    6. Keith A. Bender & John S. Heywood, 2006. "Job Satisfaction Of The Highly Educated: The Role Of Gender, Academic Tenure, And Earnings," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(2), pages 253-279, 05.
    7. Chiara Monfardini & Rosalba Radice, 2008. "Testing Exogeneity in the Bivariate Probit Model: A Monte Carlo Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(2), pages 271-282, 04.
    8. Cornelissen, Thomas & Heywood, John S. & Jirjahn, Uwe, 2011. "Performance pay, risk attitudes and job satisfaction," Labour Economics, Elsevier, vol. 18(2), pages 229-239, April.
    9. McCausland, David & Pouliakas, Konstantinos & Theodossiou, Ioannis, 2005. "Some are Punished and Some are Rewarded: A Study of the Impact of Performance Pay on Job Satisfaction," MPRA Paper 14243, University Library of Munich, Germany.
    10. Alex Bryson & Lorenzo Cappellari & Claudio Lucifora, 2010. "Why So Unhappy? The Effects of Unionization on Job Satisfaction," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(3), pages 357-380, 06.
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    14. John S. Heywood & W. S. Siebert & Xiangdong Wei, 2002. "Worker sorting and job satisfaction: The case of union and government jobs," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(4), pages 595-609, July.
    15. Jose Cabral Vieira & Antonio Menezes & Patricia Gabriel, 2005. "Low pay, higher pay and job quality: empirical evidence for Portugal," Applied Economics Letters, Taylor & Francis Journals, vol. 12(8), pages 505-511.
    16. Woodbury, Stephen A, 1983. "Substitution between Wage and Nonwage Benefits," American Economic Review, American Economic Association, vol. 73(1), pages 166-82, March.
    17. 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.
    18. Scott J. Adams, 2004. "Employer-provided Health Insurance and Job Change," Contemporary Economic Policy, Western Economic Association International, vol. 22(3), pages 357-369, 07.
    19. G. S. Maddala, 1987. "Limited Dependent Variable Models Using Panel Data," Journal of Human Resources, University of Wisconsin Press, vol. 22(3), pages 307-338.
    20. Dale-Olsen, Harald, 2006. "Wages, fringe benefits and worker turnover," Labour Economics, Elsevier, vol. 13(1), pages 87-105, February.
    21. Keith A. Bender & Susan M. Donohue & John S. Heywood, 2005. "Job satisfaction and gender segregation," Oxford Economic Papers, Oxford University Press, vol. 57(3), pages 479-496, July.
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