Firms' Wage Structures, Workers' Fairness Perceptions, Job Satisfaction and Turnover Intentions: Evidence from Linked Employer-Employee Data

33 Pages Posted: 16 Dec 2019

See all articles by Jens Mohrenweiser

Jens Mohrenweiser

Bournemouth University

Christian Pfeifer

Leuphana University of Lueneburg

Abstract

The paper uses novel data for Germany linking worker and establishment surveys with administrative social security data for all workers in the surveyed establishments. From these data, four variables are generated that describe a firm's wage structure and the positions of workers within it: (a) workers' own absolute wages, (b) workers' conditional internal reference wages within firms, (c) the conditional wage dispersion in firms, and (d) workers' conditional external reference wages across firms.Three empirical contributions are made: (1) the impact of firms' wage structures on workers' perceived wage fairness as an important organizational justice variable, (2) the impact of firms' wage structures on workers' job satisfaction and turnover intentions, and (3) the contribution of the fairness considerations on the overall effects of the wage structure variables on workers' job satisfaction and turnover intentions. The findings suggest that equity and social status considerations as well as altruistic preferences towards co-workers and inequality aversion are important, whereas the evidence for signal considerations is limited.

Keywords: income comparison, inequality, fairness, job satisfaction, turnover

JEL Classification: D63, I31, J28, J31, J63, M52

Suggested Citation

Mohrenweiser, Jens and Pfeifer, Christian, Firms' Wage Structures, Workers' Fairness Perceptions, Job Satisfaction and Turnover Intentions: Evidence from Linked Employer-Employee Data. IZA Discussion Paper No. 12821, Available at SSRN: https://ssrn.com/abstract=3503771 or http://dx.doi.org/10.2139/ssrn.3503771

Jens Mohrenweiser (Contact Author)

Bournemouth University ( email )

Fern Barrow
Poole BH12 5BB, Dorset BH8 8EB
United Kingdom

Christian Pfeifer

Leuphana University of Lueneburg ( email )

Scharnhorststra├če 1
Wilschenbrucher Weg 69
L├╝neburg, 21335
Germany

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