The Impact of Wage Increases on Job Satisfaction - Empirical Evidence and Theoretical Implications
RWTH Aachen University - School of Economics and Business Administration; Institute for the Study of Labor (IZA)
University of Cologne - Department of Business Administration and Human Resource Management; Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 387
The impact of wage increases on job satisfaction are explored. First, it is empirically established that current job satisfaction rises with absolute wage level as well as with wage increases. Second, a basic job satisfaction function is constructed based on the empirical results, and theoretical implications are analyzed. It is shown that the myopic maximization of such a function directly implies increasing and concave shaped age-earnings profiles.
Number of Pages in PDF File: 20
Keywords: Job Satisfaction, Wage Increases, Habit Formation, Age-earnings Profiles
JEL Classification: J28, J30, M12
Date posted: November 5, 2001
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