Income Inequality and Job Satisfaction of Full-Time Employees in Germany

Wunder, Christoph; Schwarze, Johannes

doi:10.2139/ssrn.898588

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Income Inequality and Job Satisfaction of Full-Time Employees in Germany

IZA Discussion Paper No. 2084

26 Pages Posted: 25 Apr 2006

See all articles by Christoph Wunder

Christoph Wunder

University of Bamberg; University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Department of Economics

Johannes Schwarze

University of Bamberg; German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Date Written: April 2006

Abstract

Using data from the German Socio-Economic Panel Study (GSOEP), it is shown that income comparison with persons who are better off has a clear impact on the job satisfaction of West German full-time employees. Two contrary effects can be identified. On the one hand, there is an aversion to disadvantageous regional income inequality, while on the other hand, individuals prefer inequality within their occupational group. The two effects are interpreted as envy and an information (or "tunnel") effect, respectively. The analysis of income comparison with persons who are worse off suggests a prestige effect. However, downward comparison is of minor importance for job satisfaction.

Keywords: job satisfaction, income inequality, social comparison, envy, prestige

JEL Classification: D63, I31, D31

Suggested Citation: Suggested Citation

Wunder, Christoph and Wunder, Christoph and Schwarze, Johannes, Income Inequality and Job Satisfaction of Full-Time Employees in Germany (April 2006). IZA Discussion Paper No. 2084, Available at SSRN: https://ssrn.com/abstract=898588 or http://dx.doi.org/10.2139/ssrn.898588