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Wage Comparisons in and out of the Firm. Evidence from a Matched Employer-Employee French Database

Listed author(s):
  • Olivier Godechot

    (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris, OSC - Observatoire sociologique du changement - Sciences Po - CNRS - Centre National de la Recherche Scientifique, MaxPo - Max Planck Sciences Po Center on Coping with Instability in Market Societies - IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris - Max Planck Institute for the Study of Societies)

  • Claudia Senik

    (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - EHESS - École des hautes études en sciences sociales - INRA - Institut National de la Recherche Agronomique - ENS Paris - École normale supérieure - Paris, UP4 - Université Paris-Sorbonne)

This paper looks at the association between wage satisfaction and different notions of reference wage, based on a matched employer-employee dataset. It shows that workers' satisfaction depends on otherpeople's income in different ways. Relative income concerns are important, but we also find robust evidence of signal effects. For instance, workers are happier the higher the median wage in their firm, holding their own wage constant. This is true of all employees, whatever their relative position in the firm. This signal effect is stronger for young people and for women. These findings are based on objective measures of earnings as well as subjective declarations about wage satisfaction, awareness of other people's wage and reported income comparisons.

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Paper provided by HAL in its series PSE Working Papers with number halshs-00907268.

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Date of creation: Nov 2013
Handle: RePEc:hal:psewpa:halshs-00907268
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00907268
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  1. Blanchflower, David G. & Oswald, Andrew J., 2001. "Well-Being Over Time in Britain and the USA," The Warwick Economics Research Paper Series (TWERPS) 616, University of Warwick, Department of Economics.
  2. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
  3. Claudia Senik, 2007. "Ambition and jealousy. Income interactions in the "Old" Europe versus the "New" Europe and the United States," PSE Working Papers halshs-00590828, HAL.
  4. Clark, Andrew E. & Senik, Claudia, 2009. "Who Compares to Whom? The Anatomy of Income Comparisons in Europe," CEPREMAP Working Papers (Docweb) 0907, CEPREMAP.
  5. Claudia Senik, 2008. "Direct evidence on income comparisons and their welfare effects," PSE Working Papers halshs-00588023, HAL.
  6. AKAY Alpaslan & BARGAIN Olivier & ZIMMERMANN Klaus F., 2011. "Relative Concerns of Rural-to-Urban Migrants in China," LISER Working Paper Series 2011-12, LISER.
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  8. Clark, Andrew E & Oswald, Andrew J, 1993. "Satisfaction and Comparison Income," Economics Discussion Papers 10018, University of Essex, Department of Economics.
  9. Andrew E. Clark & Nicolai Kristensen & Niels Westergaard-Nielsen, 2009. "Job satisfaction and co-worker wages: status or signal?," Post-Print halshs-00754388, HAL.
  10. Akay, Alpaslan & Martinsson, Peter, 2008. "Does Relative Income Matter for the Very Poor? Evidence from Rural Ethiopia," IZA Discussion Papers 3812, Institute for the Study of Labor (IZA).
  11. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
  12. McBride, Michael, 2001. "Relative-income effects on subjective well-being in the cross-section," Journal of Economic Behavior & Organization, Elsevier, vol. 45(3), pages 251-278, July.
  13. Buti,Marco & Deroose,Servaas & Gaspar,Vitor & Martins,João Nogueira (ed.), 2010. "The Euro," Cambridge Books, Cambridge University Press, number 9789279098420, December.
  14. Ferrer-i-Carbonell, Ada, 2005. "Income and well-being: an empirical analysis of the comparison income effect," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 997-1019, June.
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