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Job satisfaction and co-worker wages: status or signal?

Author

Listed:
  • Andrew E. Clark

    (PJSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, IZA - Institute for the Study of Labor - IZA, Aarhus University [Aarhus])

  • Nicolai Kristensen

    (IZA - Institute for the Study of Labor - IZA)

  • Niels Westergaard-Nielsen

    (IZA - Institute for the Study of Labor - IZA, Aarhus University [Aarhus])

Abstract

We use matched employer-employee panel data to show that individual job satisfaction is higher when other workers in the same establishment are better-paid. This runs counter to substantial existing evidence of income comparisons in subjective well-being. We argue that the difference hinges on the nature of the reference group. Here we use co-workers. Their earnings not only induce jealousy but also provide a signal about the worker's own future earnings. In our data, this positive future earnings signal outweighs any negative status effect. This phenomenon is stronger for men and in the private sector but weaker for those nearer retirement.

Suggested Citation

  • Andrew E. Clark & Nicolai Kristensen & Niels Westergaard-Nielsen, 2009. "Job satisfaction and co-worker wages: status or signal?," PSE-Ecole d'économie de Paris (Postprint) halshs-00754388, HAL.
  • Handle: RePEc:hal:pseptp:halshs-00754388
    DOI: 10.1111/j.1468-0297.2008.02236.x
    Note: View the original document on HAL open archive server: https://hal-pjse.archives-ouvertes.fr/halshs-00754388
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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