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Wage comparisons in and out of the firm. Evidence from a matched employer-employee French database

  • Olivier Godechot

    (Sciences Po, MaxPo and OSC-CNRS)

  • Claudia Senik

    (University Paris-Sorbonne and PSE)

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 other-people’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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File URL: http://www.ecineq.org/milano/WP/ECINEQ2013-311.pdf
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Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 311.

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Length: 34 pages
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2013-311
Contact details of provider: Web page: http://www.ecineq.org
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  1. AKAY Alpaslan & BARGAIN Olivier & ZIMMERMANN Klaus F., 2011. "Relative Concerns of Rural-to-Urban Migrants in China," LISER Working Paper Series 2011-12, LISER.
  2. repec:ner:tilbur:urn:nbn:nl:ui:12-3508638 is not listed on IDEAS
  3. Luttmer, Erzo F. P., 2004. "Neighbors as Negatives: Relative Earnings and Well-Being," Working Paper Series rwp04-029, Harvard University, John F. Kennedy School of Government.
  4. 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).
  5. 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.
  6. Clark, Andrew E. & Kristensen, Nicolai & Westergård-Nielsen, Niels C., 2007. "Job Satisfaction and Co-worker Wages: Status or Signal?," IZA Discussion Papers 3073, Institute for the Study of Labor (IZA).
  7. 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.
  8. 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.
  9. Andrew E. Clark & Claudia Senik, 2009. "Who compares to whom? The anatomy of income comparisons in Europe," PSE Working Papers halshs-00586036, HAL.
  10. Senik, Claudia, 2006. "Ambition and Jealousy: Income Interactions in the "Old" Europe versus the "New" Europe and the United States," IZA Discussion Papers 2083, Institute for the Study of Labor (IZA).
  11. Andrew E. Clark and Andrew J. Oswald, . "Satisfaction and Comparison Income," Economics Discussion Papers 419, University of Essex, Department of Economics.
  12. Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
  13. Senik, Claudia, 2009. "Direct evidence on income comparisons and their welfare effects," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 408-424, October.
  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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