Labor earnings and Psychological well-being: An Empirical Analysis

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.