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The Effect Of Economic Cycles On Job Satisfaction In A Two-Sector Economy

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  • Ro’i Zultan

    (BGU)

  • Oded Ravid

    (BGU)

  • Miki Malul

    (BGU)

Abstract

Economic growth improves the material well-being of all workers. However, when remuneration in the public sector is less sensitive to economic cycles than in the private sector, as is typically the case, economic growth will worsen the position of workers in the public sector relative to workers in the private sector, even though their income improves in absolute terms. As a result, job satisfaction may be countercyclical in the public sector. We test this counterintuitive hypothesis in a real-effort laboratory experiment that simulates an economy with two sectors differing only in their remuneration scheme. Economic cycles are introduced in order to test for their effect on job satisfaction and productivity in each sector. We find that job satisfaction in the “public” sector is negatively correlated with the state of the economy. This effect, however, does not carry over to productivity: even though an increase in a worker's productivity in the public sector reduces his relative income, in comparison to a similar private sector worker, we find that this does not have a negative effect on job satisfaction.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Ro’i Zultan & Oded Ravid & Miki Malul, 2016. "The Effect Of Economic Cycles On Job Satisfaction In A Two-Sector Economy," Working Papers 1605, Ben-Gurion University of the Negev, Department of Economics.
  • Handle: RePEc:bgu:wpaper:1605
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    Cited by:

    1. Hadsell, Lester & Jones, Adam T, 2020. "The company you keep: Satisfaction with life, economic freedom, and preference-policy mismatch," Journal of Comparative Economics, Elsevier, vol. 48(3), pages 642-657.
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    3. Adam T. Jones & Lester Hadsell & Robert T. Burrus, 2019. "Capitalist Views and Religion," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(3), pages 384-414, June.
    4. Filiz Gülal & Adam Ayaita, 2020. "The Impact of Minimum Wages on Well-Being: Evidence from a Quasi-experiment in Germany," Journal of Happiness Studies, Springer, vol. 21(7), pages 2669-2692, October.

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    More about this item

    Keywords

    public sector; incentives; subjective well being; job satisfaction; laboratory experiment.;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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