The effect of economic cycles on job satisfaction in a two-sector economy

Oded Ravid, Miki Malul and Ro'i Zultan

Journal of Economic Behavior & Organization, 2017, vol. 138, issue C, 1-9

Abstract: Economic growth improves the material well-being of all workers. However, when remuneration in the public sector is less sensitive to economic cycles than in the private sector, as is typically the case, economic growth will worsen the position of workers in the public sector relative to workers in the private sector, even though their income improves in absolute terms. As a result, job satisfaction may be countercyclical in the public sector. We test this counterintuitive hypothesis in a real-effort laboratory experiment that simulates an economy with two sectors differing only in their remuneration scheme. Economic cycles are introduced in order to test for their effect on job satisfaction and productivity in each sector. We find that job satisfaction in the “public” sector is negatively correlated with the state of the economy. This effect, however, does not carry over to productivity: even though an increase in a worker's productivity in the public sector reduces his relative income, in comparison to a similar private sector worker, we find that this does not have a negative effect on job satisfaction.

Keywords: Public sector; Incentives; Subjective well being; Job satisfaction; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 J28 J45 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268117300938
Full text for ScienceDirect subscribers only

Related works:
Working Paper: THE EFFECT OF ECONOMIC CYCLES ON JOB SATISFACTION IN A TWO-SECTOR ECONOMY (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:138:y:2017:i:c:p:1-9

DOI: 10.1016/j.jebo.2017.03.028

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().