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"The Further We Stretch the Higher the Sky" - On the Impact of Wage Increases on Job Satisfaction

  • Christian Grund
  • Dirk Sliwka

The impact of wage increases on job satisfaction is explored. First, it is empirically confirmed that current job satisfaction rises with the absolute wage level as well as with wage increases. Second, a basic job satisfaction function is constructed based on the empirical results, and theoretical implications are analyzed. Myopic maximization of such a function directly implies increasing and concave shaped wage profiles. It is shown that employees get unhappier over time staying on a certain job although wages increase, which again is empirically confirmed.

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File URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse1_2003.pdf
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Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse1_2003.

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Length: 25
Date of creation: Jan 2003
Date of revision:
Handle: RePEc:bon:bonedp:bgse1_2003
Contact details of provider: Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 6884
Web page: http://www.bgse.uni-bonn.de

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  1. Andrew Clark & Yannis Georgellis & Peter Sanfey, . "Job Satisfaction, Wage changes and Quits: Evidence from Germany," Economics and Finance Discussion Papers 98-06, Economics and Finance Section, School of Social Sciences, Brunel University.
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