IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Labor earnings and Psychological well-being: An Empirical Analysis

  • Grimani, Katerina

The starting point of this paper is the idea that individuals are characterized by hierarchical behavior. The theory of hierarchical needs implies that individuals have a priority approach to psychological well-being. This means that the most important needs must be satisfied first before the secondary needs come into the picture. The theory can also offer additional insights to the research field which investigates the relationship between labor earnings and psychological well-being levels. The paper uses the 5th European Working Conditions Survey (2010) which contains data from 33 European countries and Turkey. In the proposed models, psychological well-being and work related stress are placed as the dependent variables and labor earnings as the independent variable. The ordinary least squares (OLS) and ordered logistic regressions are the main statistical tools of the work. The empirical results indicate that there is a strong positive relationship between labor earnings and psychological well-being for low paid group, and a non-significant relationship between labor earnings and psychological well-being for well paid group. This result supports the presence of hierarchical behaviour. In addition, the labor earnings for low paid group show an insignificant effect on employees’ work related stress, while a highly significant positive effect on the work related stress of well-paid group is implied, hilighting the stress of higher status hypothesis. The models also contains personal variables such as gender, age, educational level, type of occupation, working hours per week, country dummy variables and employment status. The relationship of these variables to psychological well-being and work-related stress levels is also examined. Finally, there is a comparison of the empirical findings to results in the relevant literature.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: original version
Download Restriction: no

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 57098.

in new window

Date of creation: 04 Jul 2014
Date of revision:
Handle: RePEc:pra:mprapa:57098
Contact details of provider: Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Lee Cronbach, 1951. "Coefficient alpha and the internal structure of tests," Psychometrika, Springer, vol. 16(3), pages 297-334, September.
  2. Stevenson, Betsey & Wolfers, Justin, 2009. "The Paradox of Declining Female Happiness," IZA Discussion Papers 4200, Institute for the Study of Labor (IZA).
  3. Charness, Gary B & Grosskopf, Brit, 2000. "Relative Payoffs And Happiness: An Experimental Study," University of California at Santa Barbara, Economics Working Paper Series qt8389x8z2, Department of Economics, UC Santa Barbara.
  4. Alesina, Alberto & Di Tella, Rafael & MacCulloch, Robert, 2004. "Inequality and happiness: are Europeans and Americans different?," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2009-2042, August.
  5. Gardner, Jonathan & Oswald, Andrew J., 2006. "Money and Mental Wellbeing : A Longitudinal Study of Medium-Sized Lottery Wins," The Warwick Economics Research Paper Series (TWERPS) 754, University of Warwick, Department of Economics.
  6. Edward Deci & Richard Ryan, 2008. "Hedonia, eudaimonia, and well-being: an introduction," Journal of Happiness Studies, Springer, vol. 9(1), pages 1-11, January.
  7. Bernard M.S. van Praag & P. Frijters & A. Ferrer-i-Carbonell, 2002. "The Anatomy of Subjective Well-being," Tinbergen Institute Discussion Papers 02-022/3, Tinbergen Institute.
  8. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  9. Mentzakis, Emmanouil & Moro, Mirko, 2009. "The poor, the rich and the happy: Exploring the link between income and subjective well-being," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(1), pages 147-158, January.
  10. Drakopoulos, Stavros, 2011. "Hierarchical Needs, Income Comparisons and Happiness Levels," MPRA Paper 48343, University Library of Munich, Germany.
  11. Robert Cummins, 2000. "Personal Income and Subjective Well-being: A Review," Journal of Happiness Studies, Springer, vol. 1(2), pages 133-158, June.
  12. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, December.
  13. Binswanger, Mathias, 2006. "Why does income growth fail to make us happier?: Searching for the treadmills behind the paradox of happiness," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(2), pages 366-381, April.
  14. Daniel Kahneman & Alan B. Krueger, 2006. "Developments in the Measurement of Subjective Well-Being," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 3-24, Winter.
  15. Greene,William H. & Hensher,David A., 2010. "Modeling Ordered Choices," Cambridge Books, Cambridge University Press, number 9780521142373.
  16. Johnston, David W. & Lee, Wang-Sheng, 2012. "Extra Status and Extra Stress: Are Promotions Good for Us?," IZA Discussion Papers 6675, Institute for the Study of Labor (IZA).
  17. Clark, Andrew E. & Oswald, Andrew J., 1994. "Satisfaction and comparison income," CEPREMAP Working Papers (Couverture Orange) 9408, CEPREMAP.
  18. Dr Marwan T. Al-Zoubi, 2012. "The Shape Of The Relationship Between Salary And Job Satisfaction: A Field Study," Far East Journal of Psychology and Business, Far East Research Centre, vol. 7(1), pages 1-12, June.
  19. Gerdtham, Ulf-G & Johannesson, Magnus, 1997. "The Relationship between Happiness, Health and Socio-economic Factors: Results Based on Swedish Micro Data," SSE/EFI Working Paper Series in Economics and Finance 207, Stockholm School of Economics.
  20. Jan-Emmanuel De Neve & Andrew J. Oswald, 2012. "Estimating the Influence of Life Satisfaction and Positive Affect on Later Income Using Sibling Fixed-Effects," CEP Discussion Papers dp1176, Centre for Economic Performance, LSE.
  21. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," CERT Discussion Papers 0706, Centre for Economic Reform and Transformation, Heriot Watt University.
  22. Ed Diener & Robert Biswas-Diener, 2002. "Will Money Increase Subjective Well-Being?," Social Indicators Research, Springer, vol. 57(2), pages 119-169, February.
  23. Drakopoulos, Stavros A., 2005. "The paradox of Happiness: towards an alternative explanation," MPRA Paper 6870, University Library of Munich, Germany.
  24. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
  25. Pfeffer, Jeffrey, 2010. "Building Sustainable Organizations: The Human Factor," Research Papers 2017r, Stanford University, Graduate School of Business.
  26. 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.
  27. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July.
  28. Greene,William H. & Hensher,David A., 2010. "Modeling Ordered Choices," Cambridge Books, Cambridge University Press, number 9780521194204.
  29. Stutzer, Alois, 2004. "The role of income aspirations in individual happiness," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 89-109, May.
  30. Dolan, Paul & Peasgood, Tessa & White, Mathew, 2008. "Do we really know what makes us happy A review of the economic literature on the factors associated with subjective well-being," Journal of Economic Psychology, Elsevier, vol. 29(1), pages 94-122, February.
  31. Claudia Senik, 2005. "Income distribution and well-being: what can we learn from subjective data?," Journal of Economic Surveys, Wiley Blackwell, vol. 19(1), pages 43-63, 02.
  32. Michael Fordyce, 1988. "A review of research on the happiness measures: A sixty second index of happiness and mental health," Social Indicators Research, Springer, vol. 20(4), pages 355-381, August.
  33. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May.
  34. Christopher F Baum, 2006. "An Introduction to Modern Econometrics using Stata," Stata Press books, StataCorp LP, number imeus, November.
  35. van Vegchel, Natasja & de Jonge, Jan & Bosma, Hans & Schaufeli, Wilmar, 2005. "Reviewing the effort-reward imbalance model: drawing up the balance of 45 empirical studies," Social Science & Medicine, Elsevier, vol. 60(5), pages 1117-1131, March.
  36. Ahuvia, Aaron, 2008. "If money doesn't make us happy, why do we act as if it does?," Journal of Economic Psychology, Elsevier, vol. 29(4), pages 491-507, August.
  37. Di Tella, Rafael & Haisken-De New, John & MacCulloch, Robert, 2010. "Happiness adaptation to income and to status in an individual panel," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 834-852, December.
  38. 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.
  39. Jan Ott, 2005. "Level and Inequality of Happiness in Nations: Does Greater Happiness of a Greater Number Imply Greater Inequality in Happiness?," Journal of Happiness Studies, Springer, vol. 6(4), pages 397-420, December.
  40. M. Ruth & K. Donaghy & P. Kirshen, 2006. "Introduction," Chapters, in: Regional Climate Change and Variability, chapter 1 Edward Elgar.
  41. Drakopoulos, S. A. & Theodossiou, I., 1997. "Job satisfaction and target earnings," Journal of Economic Psychology, Elsevier, vol. 18(6), pages 693-704, November.
  42. Robin Douthitt & Maurice Macdonald & Randolph Mullis, 1992. "The relationship between measures of subjective and economic well-being: A new look," Social Indicators Research, Springer, vol. 26(4), pages 407-422, June.
  43. Drakopoulos, Stavros A. & Grimani, Katerina, 2013. "Maslow’s Needs Hierarchy and the Effect of Income on Happiness Levels," MPRA Paper 50987, University Library of Munich, Germany.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:57098. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.