Job Satisfaction and Co-worker Wages: Status or Signal? * This paper uses matched employer-employee panel data to show that individual job satisfaction is higher when other workers in the same establishment are better-paid. This runs contrary to a large literature which has found evidence of income comparisons in subjective well-being. We argue that the difference hinges on the nature of the reference group. We here use co-workers. Their wages not only induce jealousy, but also provide a signal about the worker's own future earnings. Our positive estimated coefficient on others' wages shows that this positive future earnings signal outweighs any negative status effect. This phenomenon is stronger for men, and in the private sector. JEL Classification:C23, C25, D84, J28, J31, J33

This paper presents results on cross-country comparison of job satisfaction across seven EU countries taking into account that people in different countries may perceive subjective questions differently. We apply a chopit model approach where the threshold parameters in an ordered probit model are re-scaled through anchoring vignettes. Compared to a traditional ordered probit model, which yields the familiar result that Denmark and Finland are ranked in the very top, the country ranking is altered when the chopit model is applied. In this case, the Scandinavian countries are ranked somewhat lower while workers from the Netherlands are found to have the highest level of job satisfaction. These results suggest that cultural differences in the way people perceive subjective questions about satisfaction make simple cross-country comparison misleading.

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The two key predictions of hedonic wage theory are that there is a trade-off between wages and nonmonetary rewards and that the latter can be used as a sorting device by firms to attract and retain the kind of employees they desire. Empirical analysis of these topics are scarce as they require detailed data on all monetary as well as nonmonetary rewards, not only for the job chosen but also for alternative offers. In this paper this data predicament is solved by the use of the vignettes method to estimate individuals' willingness to pay for fringe benefi ts and job amenities. We find clear negative wage-fringe trade-offs, considerable heterogeneity in willingness to pay for fringe benefi ts, and signs of sorting. The fi ndings imply that personnel economics models can be applied also to the analysis of nonmonetary rewards. AbstractThe two key predictions of hedonic wage theory are that there is a trade-o¤ between wages and nonmonetary rewards and that the latter can be used as a sorting device by …rms to attract and retain the kind of employees they desire. Empirical analysis of these topics are scarce as they require detailed data on all monetary as well as nonmonetary rewards, not only for the job chosen but also for alternative o¤ers. In this paper this data predicament is solved by the use of the vignettes method to estimate individuals' willingness to pay for fringe bene…ts and job amenities. We …nd clear negative wage-fringe trade-o¤s, considerable heterogeneity in willingness to pay for fringe bene…ts, and signs of sorting. The …ndings imply that personnel economics models can be applied also to the analysis of nonmonetary rewards.JEL Classi…cation: J32, J33, M52

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in External Validation of the Use of Vignettes in Cross-Country Health StudiesNabanita Datta Gupta Nicolai Kristensen Dario Pozzoli The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Cross-country comparisons of subjective assessments are rendered difficult if not impossible because of sub-population specific response style. To correct for this, the use of vignettes has become increasingly popular, notably within cross-country health studies. However, the validity of vignettes as a means to re-scale across sample populations critically rests on the assumption of "response consistency" (RC): that vignettes and self-assessments are evaluated on the same scale. In this paper, we seek to test this assumption by applying objective measures of health along with subjective measures and vignettes. Our results indicate that the assumption of RC is not innocuous and that our extended model relaxing this assumption improves the fit and significantly changes the cross-country rankings of health vis-à-vis the standard Chopit model. JEL Classification: C25, I10