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The job satisfaction-productivity nexus: A study using matched survey and register data

  • Böckerman, Petri
  • Ilmakunnas, Pekka

This paper examines the role of job satisfaction in the determination of establishment-level productivity. The matched data contain both information on job satisfaction from the ECHP (European Community Household Panel) and information on establishment productivity from longitudinal register data that can be linked to the ECHP. The estimates for the effect of a one point increase in the establishment average level of employee job satisfaction, on a scale 1-6, on productivity vary depending on the specification of the model. The preferred estimate, based on the IV estimation that uses satisfaction with housing conditions as an instrument for job satisfaction, shows that the effect on value added per hours worked is ~20% in the manufacturing sector. The economic size of this effect is modest, because the observations are bunched towards the higher end of the satisfaction scale making it very difficult to increase the average level of job satisfaction in the establishment by one point.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23348.

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Date of creation: 17 Jun 2010
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Handle: RePEc:pra:mprapa:23348
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  1. G. Steven Olley & Ariel Pakes, 1992. "The Dynamics of Productivity in the Telecommunications Equipment Industry," NBER Working Papers 3977, National Bureau of Economic Research, Inc.
  2. 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.
  3. Oswald, Andrew J. & Proto, Eugenio & Sgroi, Daniel, 2009. "Happiness and Productivity," IZA Discussion Papers 4645, Institute for the Study of Labor (IZA).
  4. Jacques Mairesse & Nathalie Greenan, 1999. "Using Employee Level Data in a Firm Level Econometric Study," NBER Working Papers 7028, National Bureau of Economic Research, Inc.
  5. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
  6. Franco Peracchi, 2002. "The European Community Household Panel: A review," Empirical Economics, Springer, vol. 27(1), pages 63-90.
  7. Sebastian Buhai & Elena Cottini & Niels Westerg�rd-Nielsen, 2008. "The Impact of Workplace Conditions on Firm Performance," Tinbergen Institute Discussion Papers 08-077/3, Tinbergen Institute.
  8. Lisa M Lynch & Sandra E Black, 2002. "How to Compete: The Impact of Workplace Practices and Information Technology on Productivity," Working Papers 02-04, Center for Economic Studies, U.S. Census Bureau.
  9. Freeman, Richard B, 1978. "Job Satisfaction as an Economic Variable," American Economic Review, American Economic Association, vol. 68(2), pages 135-41, May.
  10. John Zelenski & Steven Murphy & David Jenkins, 2008. "The Happy-Productive Worker Thesis Revisited," Journal of Happiness Studies, Springer, vol. 9(4), pages 521-537, December.
  11. Malcolm Patterson & Peter Warr & Michael West, 2004. "Organizational climate and company productivity: the role of employee affect and employee level," LSE Research Online Documents on Economics 19977, London School of Economics and Political Science, LSE Library.
  12. Eero Lehto, 2007. "Regional Impact of Research and Development on Productivity," Regional Studies, Taylor & Francis Journals, vol. 41(5), pages 623-638.
  13. repec:dgr:uvatin:2008077 is not listed on IDEAS
  14. Daniel S. Hamermesh, 2004. "Subjective Outcomes in Economics," Southern Economic Journal, Southern Economic Association, vol. 71(1), pages 2-11, July.
  15. Sinikka Vanhala & Kaija Tuomi, 2006. "HRM, Company Performance and Employee Well-being," management revue. Socio-economic Studies, Rainer Hampp Verlag, vol. 17(3), pages 241-255.
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