Earnings Aspirations and Job Satisfaction: The Affective and Cognitive Impact of Earnings Comparisons

University of Aberdeen Business School Working Paper No. 2007-01

Posted: 11 Jan 2008

See all articles by Ioannis Theodossiou

Ioannis Theodossiou

University of Aberdeen - Business School

Georgios A. Panos

University of Glasgow - Adam Smith Business School

Date Written: January 2007

Abstract

Theories of interdependent preferences predicts that the effect of peer earnings on individual well-being is either negative, the relative deprivation, or positive the cognitive effect. The evidence so far has attributed the dominance of each of the above effects on the country's economic and political environment. This study claims that relative earnings can affect job satisfaction in two opposite ways, through the affective, relative deprivation, and the cognitive channel. The dominance of each effect depends on the individual-specific financial situation rather than the country's environment. Utilising a longitudinal dataset for British employees, the results of this study show that the cognitive informational effect of peer earnings dominates social comparisons for those in financial distress. It further suggests job satisfaction is a relative concept.

Keywords: Earnings, Job Satisfaction, Financial Vulnerability, Reference Group

JEL Classification: C23, C25, D64, D84, J28

Suggested Citation

Theodossiou, Ioannis and Panos, Georgios A., Earnings Aspirations and Job Satisfaction: The Affective and Cognitive Impact of Earnings Comparisons (January 2007). University of Aberdeen Business School Working Paper No. 2007-01, Available at SSRN: https://ssrn.com/abstract=1082719

Ioannis Theodossiou (Contact Author)

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Georgios A. Panos

University of Glasgow - Adam Smith Business School ( email )

Gilbert Scott Building
University Avenue
Glasgow, Scotland G128QQ
United Kingdom

HOME PAGE: http://https://sites.google.com/site/georgiosapanos/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
445
PlumX Metrics