Wage Structures, Fairness Perceptions, and Job Satisfaction: Evidence from Linked Employer-Employee Data

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The paper investigates the impact of firms’ wage structures and workers’ wage fairness perceptions on workers’ well-being. For this purpose, worker and establishment surveys are linked with administrative social security data. Four variables are generated, using approximately half a million worker-year observations, that describe firms’ wage structures and workers’ positions within the wage structures: own absolute wages, internal reference wages within firms, external reference wages, and the wage dispersion in firms. The interrelations between these wage structure variables, workers’ perceived wage fairness, and job satisfaction are then analyzed using regressions. Interpersonal wage comparisons between co-workers in the same firm and across firms as well as wage fairness perceptions are found to be significant determinants of workers’ well-being. The overall findings suggest that equity and social status considerations as well as altruistic preferences towards co-workers and inequality aversion are more important than signal considerations in this context.

Original languageEnglish
JournalJournal of Happiness Studies
Issue number7
Pages (from-to)2291-2308
Number of pages18
Publication statusPublished - 10.2023

Bibliographical note

Funding Information:
We thank participants of the 2020 Annual Meeting of the American Economic Association in San Diego, the Workshop in “Assessing the Impact of Human Resource Management Practices” 2017 in Nurnberg, the Workshop in Management Research 2017 in Wuppertal, department seminar at LUISS university Rome, as well as Andrew Clark, Stefan Schneck, Susanne Steffes, Gesine Stephan, Knut Gerlach, and reviewer of this journal for their comments. Notes : The used data is confidential and data access was provided via on-site use at the Research Data Centre (FDZ) of the German Federal Employment Agency (BA) at the Institute for Employment Research (IAB) and subsequently remote data access. For help with the data, our statistical programs in Stata, and replication studies contact Jens Mohrenweiser.

Publisher Copyright:
© 2023, The Author(s).