Working Paper: NBER ID: w7332
Authors: Daniel S. Hamermesh
Abstract: The distribution of job satisfaction widened across cohorts of young men in the United States between 1978 and 1988, and between 1978 and 1996, in ways correlated with changing wage inequality. Satisfaction among workers in upper earnings quantiles rose relative to that of workers in lower quantiles. An identical phenomenon is observed among men in West Germany in response to a sharp increase in the relative earnings of high-wage men in the mid-1990s. Several hypotheses about the determinants of satisfaction are presented and examined using both cross-section data on these cohorts and panel data from the NLSY and the German SOEP. The evidence is most consistent with workers regret about the returns to their investment in skills affecting their satisfaction. Job satisfaction is especially responsive to surprises in the returns to observable skills, less so to surprises in the returns to unobservables; and the effects of earnings shocks on job satisfaction dissipate over time.
Keywords: No keywords provided
JEL Codes: J30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| wage inequality (J31) | job satisfaction (J28) |
| returns to skill investments (J24) | job satisfaction (J28) |
| earnings shocks (J31) | job satisfaction (J28) |
| initial expectations (D84) | job satisfaction (J28) |
| job satisfaction (J28) | temporal dimension (influence of expectations and outcomes) (D84) |