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Income Inequality and Job Satisfaction of Full-Time Employees in Germany

Author

Listed:
  • Christoph Wunder

    () (University of Erlangen-Nuremberg)

  • Johannes Schwarze

    () (Bamberg University, DIW Berlin, and IZA Bonn)

Abstract

Using data from the German Socio-Economic Panel Study (SOEP), it is shown that income comparisons with persons who are better off has a clear impact on the job satisfaction of West German full-time employees. Two contrary effects can be identified. On the one hand, there is an aversion to disadvantageous regional income inequality, while, on the other hand, individuals prefer inequality within their occupational group. The two effects are interpreted as envy and an information (or ‘tunnel’) effect, respectively. The analysis of income comparison with persons who are worse off suggests a prestige effect. However, downward comparison is of minor importance for job satisfaction.

Suggested Citation

  • Christoph Wunder & Johannes Schwarze, 2009. "Income Inequality and Job Satisfaction of Full-Time Employees in Germany," Journal of Income Distribution, Journal of Income Distribution, vol. 18(2), pages 70-91, June.
  • Handle: RePEc:jid:journl:y:2009:v:18:i:2:p:70-91
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    File URL: http://jid.journals.yorku.ca/index.php/jid/article/view/23366
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    Cited by:

    1. Lars Thiel, 2014. "Illness and Health Satisfaction: The Role of Relative Comparisons," SOEPpapers on Multidisciplinary Panel Data Research 695, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Jantsch, Antje & Wunder, Christoph & Hirschauer, Norbert, 2016. "Lebensqualität In Deutschland – Ein Vergleich Von Ländlichen Und Städtischen Regionen," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244798, German Association of Agricultural Economists (GEWISOLA).
    3. Wunder, Christoph, 2016. "Working hours mismatch and well-being: comparative evidence from Australian and German panel data," Annual Conference 2016 (Augsburg): Demographic Change 145544, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    job satisfaction; income inequality; social comparison; envy; prestige; information effect; tunnel effect; German Socio-Economic Panel Study (SOEP);

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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