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

  • Christoph Wunder


    (University of Erlangen-Nuremberg)

  • Johannes Schwarze


    (Bamberg University, DIW Berlin, and IZA Bonn)

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    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.

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    Article provided by Journal of Income Distribution in its journal Journal of Income Distribution.

    Volume (Year): 18 (2009)
    Issue (Month): 2 (June)
    Pages: 70-91

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    Handle: RePEc:jid:journl:y:2009:v:18:i:2:p:70-91
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