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Time-in-Labour-Market and the Reference Group

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  • HAURET Laetitia
  • WILLIAMS Donald R.

Abstract

This paper examines the relationship between the time spent in the labour market and the choice of the reference group for making relative income comparisons. The choice of reference group has been found in previous work to be an important determinant of various measures of well-being, including life-satisfaction, job-satisfaction, and satisfaction with pay. We estimate multinomial logit models of reference group determination using data from a survey of working conditions. The results suggest that a greater time spent in the labour market is associated with a higher probability of choosing local workers as the reference group for a sample of foreign “cross-border” workers. The results are consistent with studies of immigrant workers who are hypothesized to adjust their reference group over time.

Suggested Citation

  • HAURET Laetitia & WILLIAMS Donald R., 2018. "Time-in-Labour-Market and the Reference Group," LISER Working Paper Series 2018-02, Luxembourg Institute of Socio-Economic Research (LISER).
    • Handle: RePEc:irs:cepswp:2018-02
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    References listed on IDEAS

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    1. AndrewE. Clark & Claudia Senik, 2010. "Who Compares to Whom? The Anatomy of Income Comparisons in Europe," Economic Journal, Royal Economic Society, vol. 120(544), pages 573-594, May.
    2. Félix Neto, 1995. "Predictors of satisfaction with life among second generation migrants," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 35(1), pages 93-116, May.
    3. AndrewE. Clark & Nicolai Kristensen & Niels Westergård-Nielsen, 2009. "Job Satisfaction and Co-worker Wages: Status or Signal?," Economic Journal, Royal Economic Society, vol. 119(536), pages 430-447, March.
    4. 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.
    5. Andrew E. Clark & Claudia Senik & Katsunori Yamada, 2022. "The Joneses in Japan: income comparisons and financial satisfaction," The Japanese Economic Review, Springer, vol. 73(2), pages 351-372, April.
    6. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
    7. Delhey, Jan & Kohler, Ulrich, 2005. "From nationally bounded to pan-European inequalities? On the importance of foreign countries as reference groups," Discussion Papers, Research Unit: Inequality and Social Integration SP I 2005-204, WZB Berlin Social Science Center.
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    9. Armin Falk & Markus Knell, "undated". "Choosing the Joneses On the Endogeneity of Reference Groups," IEW - Working Papers 053, Institute for Empirical Research in Economics - University of Zurich.
    10. Brown, Sarah & Gray, Daniel & Roberts, Jennifer, 2015. "The relative income hypothesis: A comparison of methods," Economics Letters, Elsevier, vol. 130(C), pages 47-50.
    11. Ozge Gokdemir & Devrim Dumludag, 2012. "Life Satisfaction Among Turkish and Moroccan Immigrants in the Netherlands: The Role of Absolute and Relative Income," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 106(3), pages 407-417, May.
    12. Rodrigo Montero & Diego Vásquez, 2015. "Job Satisfaction and Reference Wages: Evidence for a Developing Country," Journal of Happiness Studies, Springer, vol. 16(6), pages 1493-1507, December.
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    Keywords

    reference group; cross-border workers; job satisfaction;
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