Monetary Reference Points of Managers – Empirical Evidence of Status Quo Preferences and Social Comparisons

18 Pages Posted: 4 Jan 2017

See all articles by Christian Grund

Christian Grund

RWTH Aachen University - School of Economics and Business Administration; IZA Institute of Labor Economics

Johannes Martin

RWTH Aachen University - School of Business and Economics

Date Written: February 2017

Abstract

We explore whether monetary reference points affect managers′ job satisfaction. These reference points include a manager′s own status quo and the incomes of comparable managers within the same firm and also at the market level. Making use of a unique panel data set of managers in the German chemical sector, we find that social comparisons of compensation do affect reported job satisfaction. Both the relative income position within a manager's own firm and a manager's wage rank on the market have positive relations with job satisfaction. There is no evidence of the relevance of status quo considerations once we control for firm‐related pay variables.

Suggested Citation

Grund, Christian and Martin, Johannes, Monetary Reference Points of Managers – Empirical Evidence of Status Quo Preferences and Social Comparisons (February 2017). Scottish Journal of Political Economy, Vol. 64, Issue 1, pp. 70-87, 2017. Available at SSRN: https://ssrn.com/abstract=2893395 or http://dx.doi.org/10.1111/sjpe.12103

Christian Grund (Contact Author)

RWTH Aachen University - School of Economics and Business Administration ( email )

Aachen
Germany

IZA Institute of Labor Economics

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

Johannes Martin

RWTH Aachen University - School of Business and Economics ( email )

Templergraben 64
52056 Aachen, 52056
Germany

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