Abstract for “Relative Concerns in and out of the Firm. Lessons from a Matched
Employer-Employee French Database”
Olivier Godechot (CNRS, France)
Claudia Senik (Paris School of Economics, France)
This paper looks at the association between wage satisfaction and different
notions of reference income, based on a matched employer-employee dataset. It
shows that workers’ satisfaction depends on other-people’s income in different
ways. Relative income concerns are important, but we also find robust evidence of
signal effects. For instance, workers are happier the higher the median wage in
their firm, holding their own wage constant. This is true of all employees, whatever
their relative position in the firm. However, the signal effect is stronger for young
people and for women. These findings are based on objective measures of earnings
as well as subjective declarations about wage satisfaction, awareness of other
people’s wage and reported income comparisons.