The purpose of this paper is to test empirically whether there exist spillover externalities in job satisfaction, i.e., to test whether individual-level job satisfaction is affected by the aggregate job satisfaction level in a certain labor market environment.
The authors use a linear-in-means model of social interactions in the empirical analysis. The authors develop an original strategy, motivated by the hierarchical models of social processes, to identify the parameters of interest. BHPS and WERS datasets are used to perform the estimations both at the establishment and local labor market levels.
The authors find that one standard deviation increase in aggregate job satisfaction leads to a 0.42 standard deviation increase in individual-level job satisfaction at the workplace level and a 0.15 standard deviation increase in individual-level job satisfaction at the local labor market level. In other words, the authors report that statistically significant job satisfaction spillovers exist both at the establishment level and local labor market level; and, the former being approximately three times larger than the latter.
First, this is the first paper in the literature estimating spillover effects in job satisfaction. Second, the authors show that the degree of these spillover externalities may change at different aggregation levels. Finally, motivated by the hierarchical models of social processes, the author develop an original econometric identification strategy.
The authors thank Arnaud Chevalier, Andrew Clark, Paul Devereux, Steve Durlauf, Hakan Ercan, Nicolas Jacquemet, Murat Kirdar, Peter Kuhn, Alex Michaelides, Natalia Montinari, Claudia Senik, Pedro Vicente, seminar participants at the Central Bank of the Republic of Turkey, Galatasaray University, Paris School of Economics, Universidade Nova de Lisboa, TOBB-ETU, the participants of the EDE-EM Summer Meeting in Paris, Asian Meeting of the Econometric Society in Delhi, Turkish Economic Association Annual Conference in Izmir, Workshop on Social Economy in Bologna, Royal Economic Society Conference in Manchester, Applied Economics Meeting in Gran Canaria, and European Association of Labor Economists Conference in Ljubljana for useful suggestions. The authors are particularly grateful to Martin Kahanec (the Editor) and two anonymous referees for very helpful comments. Tugba Zeydanli gratefully acknowledges - financial support from the European Doctorate in Economics - Erasmus Mundus. The views expressed here are of authors ' own and do not necessarily reflect those of the Central Bank of the Republic of Turkey. All errors are of authors ' .
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