Job Satisfaction and Co-Worker Wages: Status or Signal?

30 Pages Posted: 3 Nov 2007

See all articles by Andrew Clark

Andrew Clark

Paris School of Economics (PSE); IZA Institute of Labor Economics

Nicolai Kristensen

Aarhus School of Business

Niels Westergaard-Nielsen

Copenhagen Business School; IZA Institute of Labor Economics

Date Written: September 2007

Abstract

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.

Keywords: job satisfaction, co-workers, comparison income, wage expectations, tournaments

JEL Classification: C23, C25, D84, J28, J31, J33

Suggested Citation

Clark, Andrew Eric and Kristensen, Nicolai and Westergaard-Nielsen, Niels, Job Satisfaction and Co-Worker Wages: Status or Signal? (September 2007). IZA Discussion Paper No. 3073. Available at SSRN: https://ssrn.com/abstract=1026889

Andrew Eric Clark (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Nicolai Kristensen

Aarhus School of Business ( email )

Haslegaardsvej 10
DK-8210 Aarhus, 8210
Denmark

Niels Westergaard-Nielsen

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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