The Impact of Wage Increases on Job Satisfaction - Empirical Evidence and Theoretical Implications

20 Pages Posted: 5 Nov 2001

See all articles by Christian Grund

Christian Grund

RWTH Aachen University - School of Economics and Business Administration; IZA Institute of Labor Economics

Dirk Sliwka

University of Cologne - Faculty of Management, Economics and Social Sciences; IZA Institute of Labor Economics

Date Written: November 2001

Abstract

The impact of wage increases on job satisfaction are explored. First, it is empirically established that current job satisfaction rises with absolute wage level as well as with wage increases. Second, a basic job satisfaction function is constructed based on the empirical results, and theoretical implications are analyzed. It is shown that the myopic maximization of such a function directly implies increasing and concave shaped age-earnings profiles.

Keywords: Job Satisfaction, Wage Increases, Habit Formation, Age-earnings Profiles

JEL Classification: J28, J30, M12

Suggested Citation

Grund, Christian and Sliwka, Dirk, The Impact of Wage Increases on Job Satisfaction - Empirical Evidence and Theoretical Implications (November 2001). Available at SSRN: https://ssrn.com/abstract=289100

Christian Grund (Contact Author)

RWTH Aachen University - School of Economics and Business Administration ( email )

Aachen
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Dirk Sliwka

University of Cologne - Faculty of Management, Economics and Social Sciences ( email )

Richard-Strauss-Str. 2
Cologne, D-50923
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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