IZA DP No. 387: The Impact of Wage Increases on Job Satisfaction - Empirical Evidence and Theoretical Implications
completely revised version published as IZA DP No. 1879
The impact of wage increases on job satisfaction is 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 analysed. It is shown that the myopic maximisation of such a function directly implies increasing and concave shaped age-earnings profiles.