Job Satisfaction and Co‐worker Wages: Status or Signal?

Abstract

Job Satisfaction and Co-worker Wages: Status or Signal? * This paper uses matched employer-employee panel data to show that individual job satisfaction is higher when other workers in the same establishment are better-paid. This runs contrary to a large literature which has found evidence of income comparisons in subjective well-being. We argue that the difference hinges on the nature of the reference group. We here use co-workers. Their wages not only induce jealousy, but also provide a signal about the worker's own future earnings. Our positive estimated coefficient on others' wages shows that this positive future earnings signal outweighs any negative status effect. This phenomenon is stronger for men, and in the private sector. JEL Classification:C23, C25, D84, J28, J31, J33

Local neighbors as positives, regional neighbors as negatives: Competing channels in the relationship between others’ income, health, and happiness

“…In "old" Europe, on the other hand, the relationship is negative. While evidence consistent with the tunnel effect in the SWB literature has also been reported by Clark et al (2009b), D'Ambrosio & Frick (2012 and FitzRoy et al (2014), it should be noted that none of this evidence emerges using static geographicallybased reference groups. Hirschman & Rothschild (1973) also note that it is possible for others' income to serve as a negative signal of one's future income.…”

Job satisfaction and relative income in economic transition: Status or signal?

“…However, Clark et al (2009) and Panos and Theodossiou (2007) find support for the signal effect using Danish and British panel data respectively. It is likely that there will be more evidence of the signal effect in transitional economies, than stable western industrialized economies.…”

“…Recent interest amongst economists in job satisfaction was reignited by a series of articles by Oswald (eg. Clark, 1996, 1997;Clarke & Oswald, 1996;Clark et al, 2009). Economists have focused on a range of issues, including how trade union membership effects job satisfaction (Borjas, 1979) and the gender gap in job satisfaction (see eg.…”

“…Clark et al, 2009), such an approach has been criticized in the psychology literature on job satisfaction, in which multi-item indicators have long been widely used on two grounds. The first is that the researcher cannot estimate the internal consistency of a single item indicator, with the result being that such indicators are subject to low levels of internal reliability (see Pollard, 1996;Wanous et al, 1997;Oshagbemi, 1999).…”

Inequality at Work: The Effect of Peer Salaries on Job Satisfaction

“…More closely related to our study, Galizzi and Lang (1998), using administrative data from Italian firms, show that, conditional on own wages, the average wages of similar workers in the firm is positively related to future wage growth and negatively related to quits. Clark et al (2009) show, using matched employer-employee panel data, that individual job satisfaction is higher when other workers in the same establishment are better-paid, and interpret this as evidence of a tunnel effect.…”