Wage comparisons in and out of the firm

Olivier Godechot and Claudia Senik ()
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Claudia Senik: PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UP4 - Université Paris-Sorbonne

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Abstract: This paper looks at the association between wage satisfaction and other people's pay, based on a matched employer–employee dataset. Three notions of reference wage appear to be being of particular importance: (i) the median wage level in one's firm, (ii) the level of wage of similar workers in the region, and (iii) the top 1% wage in one's firm. The first one triggers a signal effect, whereby all employees – especially young ones – whatever their relative position in the firm, are happier the higher the median wage in their firm, holding their own wage constant. The second and the third ones are sources of relative deprivation, i.e. workers' satisfaction decreases with the gap between their own salary and these reference categories. These findings are based on objective measures of earnings as well as subjective declarations about wage satisfaction, awareness of other people's pay and reported income comparisons.

Keywords: Matched employer–employee survey data; Income comparisons; Distribution; Job satisfaction; Wage satisfaction; Signal effect; Matched employer; Employee survey data; Sociologie; Comparaison de revenus; Emploi (search for similar items in EconPapers)
Date: 2015-07
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01314331v1
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Citations: View citations in EconPapers (21)

Published in Journal of Economic Behavior and Organization, 2015, 117 (117), pp.395 - 410. ⟨10.1016/j.jebo.2015.07.003⟩

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Related works:
Working Paper: Wage comparisons in and out of the firm (2015)
Working Paper: Wage comparisons in and out of the firm (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-01314331

DOI: 10.1016/j.jebo.2015.07.003

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