Relative Pay, Rank and Happiness: A Comparison Between Genders and Part- and Full-Time Employees

Abstract

This paper investigates the effects of comparison pay on job and life satisfaction with longitudinal survey data from Germany. I use linear fixed effects models to account for unobserved heterogeneity and define the reference groups as individuals within the same occupation and industry. Men and women are expected to behave differently to comparison pay and are therefore investigated separately. Additionally, I investigate full- and part-time employees separately because the effect of relative positions in the reference group should affect life satisfaction for full-time employees only. The findings indicate that both relative pay and the individual rank within the respective reference group affect job and life satisfaction for full-time employed males only, while part-time employed females gain job satisfaction with increasing rank within their reference group. Part-time employees experience no change in their life satisfaction due to changes in either inequality dimension.

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Notes

  1. 1.

    I use well-being, happiness and satisfaction interchangeably in this article.

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Acknowledgements

The author would like to thank Andreas Eberl, Regina T. Riphahn and two anonymous referees for their helpful comments and suggestions.

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Correspondence to Matthias Collischon.

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Collischon, M. Relative Pay, Rank and Happiness: A Comparison Between Genders and Part- and Full-Time Employees. J Happiness Stud 20, 67–80 (2019). https://doi.org/10.1007/s10902-017-9937-z

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Keywords

  • Comparison pay
  • Rank-income hypothesis
  • Reference-wage hypothesis
  • Life satisfaction
  • Happiness

JEL Classification

  • I31
  • J16