Working Paper: NBER ID: w16396
Authors: David Card; Alexandre Mas; Enrico Moretti; Emmanuel Saez
Abstract: We use a simple theoretical framework and a randomized manipulation of access to information on peers' wages to provide new evidence on the effects of relative pay on individual job satisfaction and job search intentions. A randomly chosen subset of employees of the University of California (UC) was informed about a new website listing the pay of University employees. All employees were then surveyed about their job satisfaction and job search intentions. Our information treatment doubles the fraction of employees using the website, with the vast majority of new users accessing data on the pay of colleagues in their own department. We find an asymmetric response to the information treatment: workers with salaries below the median for their pay unit and occupation report lower pay and job satisfaction, while those earning above the median report no higher satisfaction. Likewise, below-median earners report a significant increase in the likelihood of looking for a new job, while above-median earners are unaffected. Our findings suggest that job satisfaction depends directly on relative pay comparisons, and that this relationship is non-linear.
Keywords: job satisfaction; peer salaries; income inequality; experimental design
JEL Codes: J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| accessing information about peer salaries (J31) | reduction in job satisfaction for employees earning below the median salary (J31) |
| reduction in job satisfaction for employees earning below the median salary (J31) | increased likelihood of seeking new employment (J63) |
| accessing information about peer salaries (J31) | increased likelihood of seeking new employment for below-median earners (J62) |
| accessing information about peer salaries (J31) | no significant increase in job satisfaction for above-median earners (J31) |