IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/29426.html
   My bibliography  Save this paper

Keeping up with the Joneses by finding a better-paid job - The effect of relative income on job mobility

Author

Listed:
  • Kronenberg, Kristin
  • Kronenberg, Tobias

Abstract

It has been shown that a person’s relative income – compared to a reference group – has a negative impact on self-reported happiness. This suggests that people who aim at increasing their happiness should try to find a better-paid job if their relative income is low. In this paper we study this hypothesis by estimating the effect of relative income on job mobility, using a dataset containing information on roughly four million Dutch employees. We consider three different reference groups: people who live in the same neighborhood, people who work for the same employer, and people who share certain demographic characteristics. Our findings suggest that workers compare their own income to that of their neighbors, and low relative income is associated with higher job mobility. We conclude that low relative income (compared to the neighbors) reduces workers’ happiness, and workers react to this by finding a new job which may offer the prospect of higher pay.

Suggested Citation

  • Kronenberg, Kristin & Kronenberg, Tobias, 2011. "Keeping up with the Joneses by finding a better-paid job - The effect of relative income on job mobility," MPRA Paper 29426, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:29426
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/29426/1/MPRA_paper_29426.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Linneman, Peter & Graves, Philip E., 1983. "Migration and job change: A multinomial logit approach," Journal of Urban Economics, Elsevier, vol. 14(3), pages 263-279, November.
    2. Erzo F. P. Luttmer, 2005. "Neighbors as Negatives: Relative Earnings and Well-Being," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 963-1002.
    3. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
    4. Bergin, Adele, 2009. "Job Mobility in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 40(1), pages 15-47.
    5. Andrew E. Clark & Nicolai Kristensen & Niels Westergård-Nielsen, 2009. "Economic Satisfaction and Income Rank in Small Neighbourhoods," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 519-527, 04-05.
    6. 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.
    7. Larry A. Sjaastad, 1970. "The Costs and Returns of Human Migration," Palgrave Macmillan Books, in: Harry W. Richardson (ed.), Regional Economics, chapter 9, pages 115-133, Palgrave Macmillan.
    8. Kronenberg, Kristin & Carree, Martin, 2010. "Job and residential mobility in the Netherlands: the influence of human capital, household composition and location," MPRA Paper 25840, University Library of Munich, Germany.
    9. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
    10. repec:bla:econom:v:48:y:1981:i:189:p:1-15 is not listed on IDEAS
    11. Veblen, Thorstein, 2009. "The Theory of the Leisure Class," OUP Catalogue, Oxford University Press, number 9780199552580 edited by Banta, Martha, Decembrie.
    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. repec:pse:psecon:2008-44 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stefan Jestl & Mathias Moser & Anna Katharina Raggl, 2021. "Cannot keep up with the Joneses: how relative deprivation pushes internal migration in Austria," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 49(2), pages 210-231, November.
    2. Battisti, Michele, 2017. "High wage workers and high wage peers," Labour Economics, Elsevier, vol. 46(C), pages 47-63.
    3. Asmaa Elsayed Belal, 2023. "Antecedents of employee mobility: a systematic review and agenda for future research," Management Review Quarterly, Springer, vol. 73(4), pages 1795-1823, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hajdu, Tamás & Hajdu, Gábor, 2011. "A hasznosság és a relatív jövedelem kapcsolatának vizsgálata magyar adatok segítségével [Examining the relation of utility and relative income using Hungarian data]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 56-73.
    2. Filiz Gülal & Adam Ayaita, 2020. "The Impact of Minimum Wages on Well-Being: Evidence from a Quasi-experiment in Germany," Journal of Happiness Studies, Springer, vol. 21(7), pages 2669-2692, October.
    3. Li, Linyang, 2018. "Financial inclusion and poverty: The role of relative income," China Economic Review, Elsevier, vol. 52(C), pages 165-191.
    4. Andrew E. Clark & Claudia Senik, 2010. "Will GDP growth increase happiness in developing countries?," PSE Working Papers halshs-00564985, HAL.
    5. Hong, Yan-Zhen & Su, Yi-Ju & Chang, Hung-Hao, 2023. "Analyzing the relationship between income and life satisfaction of Forest farm households - a behavioral economics approach," Forest Policy and Economics, Elsevier, vol. 148(C).
    6. Nicolas L. Bottan & Ricardo Perez-Truglia, 2022. "Choosing Your Pond: Location Choices and Relative Income," The Review of Economics and Statistics, MIT Press, vol. 104(5), pages 1010-1027, December.
    7. Jantsch, Antje & Le Blanc, Julia & Schmidt, Tobias, 2022. "Wealth and subjective well-being in Germany," Discussion Papers 11/2022, Deutsche Bundesbank.
    8. Ravallion, Martin & Lokshin, Michael, 2010. "Who cares about relative deprivation?," Journal of Economic Behavior & Organization, Elsevier, vol. 73(2), pages 171-185, February.
    9. Mujcic, Redzo & Frijters, Paul, 2015. "Conspicuous consumption, conspicuous health, and optimal taxation," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 59-70.
    10. Brown, Sarah & Gray, Daniel, 2016. "Household finances and well-being in Australia: An empirical analysis of comparison effects," Journal of Economic Psychology, Elsevier, vol. 53(C), pages 17-36.
    11. Benno Torgler & Sascha L. Schmidt & Bruno S. Frey, 2006. "Relative Income Position And Performance: An Empirical Panel Analysis," IEW - Working Papers 268, Institute for Empirical Research in Economics - University of Zurich.
    12. Santiago Budria, 2013. "Are Relative-Income Effects Constant Across the Well-Being Distribution?," Journal of Happiness Studies, Springer, vol. 14(4), pages 1379-1408, August.
    13. Adalgiso AMENDOLA & Roberto DELL'ANNO & Lavinia PARISI, 2015. "Happiness, Inequality and Relative Concerns in European Countries," CELPE Discussion Papers 136, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    14. Sugata Marjit & Lei Yang, 2015. "Accumulation with Malnutrition - The Role of Status Seeking Behavior," Discussion Papers Series 544, School of Economics, University of Queensland, Australia.
    15. Jantsch, Antje & Le Blanc, Julia & Schmidt, Tobias, 2024. "Beyond income: Exploring the role of household wealth for subjective well-being in Germany," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 25(7).
    16. Mohsen Javdani & Brian Krauth, 2020. "Job satisfaction and co‐worker pay in Canadian firms," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(1), pages 212-248, February.
    17. Diriwaechter, Patric & Shvartsman, Elena, 2018. "The anticipation and adaptation effects of intra- and interpersonal wage changes on job satisfaction," Journal of Economic Behavior & Organization, Elsevier, vol. 146(C), pages 116-140.
    18. Mary C. Daly & Daniel J. Wilson, 2009. "Happiness, Unhappiness, and Suicide: An Empirical Assessment," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 539-549, 04-05.
    19. Benno Torgler & Justina A.V. Fischer, 2006. "Does Envy Destroy Social Fundamentals? The Impact of Relative Income Position on Social Capital," Working Papers 2006.38, Fondazione Eni Enrico Mattei.
    20. Brown, Sarah & Gray, Daniel & Roberts, Jennifer, 2015. "The relative income hypothesis: A comparison of methods," Economics Letters, Elsevier, vol. 130(C), pages 47-50.

    More about this item

    Keywords

    Relative income; job mobility; happiness; social status;
    All these keywords.

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • D10 - Microeconomics - - Household Behavior - - - General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:29426. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.