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Introduction: subjective wellbeing and the labour market
Article Type: Introduction: subjective wellbeing and the labour market From: International Journal of Manpower, Volume 29, Issue 7
About the Guest Editors Yannis Georgellis is a Senior Lecturer in Economics at Brunel University. He holds a PhD degree in Economics from West Virginia University and an MSc degree from the Athens University of Economics and Business. His main research interests are in labour economics, human resource management and behavioural economics. He has published numerous articles in leading economics and psychology journals.
Thomas Lange serves as Professor of Economics and Chair of the Department of Business Economics at AUT School of Business, Auckland University of Technology, Auckland, New Zealand. He was educated at the University of Saarland, Staffordshire University and the London School of Economics and has written extensively in the areas of labour economics, human resource management and industrial relations. His current research interests include the economics of training, HR practices and employees’ subjective wellbeing.
Traditionally, mainstream economists have viewed subjective variables such as job satisfaction with some suspicion and contempt and as outside the purview of empirical economic analysis. In an area that has primarily been the domain of social psychologists, economists lamented subjective measurements as being too noisy to be of analytical value. Only gradually have economists admitted job satisfaction into the economic realm because of its impact on economic behaviour. However, in the past decade or so, there has been a trend of an explosive growth in the number of empirical studies in the economics literature exploring job satisfaction both, as a dependent and as an independent variable. While numerous studies have tried to link, compare and disentangle the determinants of job satisfaction, an equally impressive volume of empirical work has been devoted to exploring how job satisfaction affects actual behaviour and labour market outcomes. One fact that emerges from such work is that income or the wage rate per se is not the sole, and often not the most important, job attribute that workers care about. Job security, flexible hours, and working conditions are just some attributes often listed by workers themselves as being important in a job. Likewise, how workers feel about their jobs, as reported in job satisfaction questionnaires and subjective job evaluation surveys, has been shown to be strong predictors of quits, absenteeism, productivity, and even health. Evidently, the large volume of empirical findings, supporting the link between subjective job evaluations and actual labour market outcomes, has facilitated the shift of job satisfaction research from the fringes to the mainstream of economics research. Following a parallel trend, economists have started exploring, and becoming more susceptible to, the notion that utility may be relative and the possibility that utility may even adapt to changing circumstances. Recent empirical work shows that utility depends on income relative to some reference or comparison income and that income of the reference group is as important a determinant of utility as one’s own income. The notion of adaptation is a more challenging one for economists, as, contrary to economic doctrine, adaptation implies that changing economic or life circumstances have little or no impact on utility.
This special issue contributes to this growing literature, exploring the determinants of job satisfaction in the context of subjective evaluations of jobs. Comparison effects are at the heart of our empirical assessments, which turn out to matter with regard to self-employment, ethnicity, social and entrepreneurial capital, culture and religion, and human resource practices. Interestingly, job satisfaction seems to also affect how rapidly workers adapt to the experience of losing a job.
We commence our collection with the analysis by Clark, Colombier and Masclet who use French and British panel data to examine domains of job satisfaction among the first- and second-generation self-employed. The data for both countries include information on various measures of job satisfaction, and the respondent’s parents’ occupation. Reinforcing the growing importance in empirical research of trans-generational reference groups, the authors uncover that the first-generation self-employed (those whose parents were not self-employed) are more satisfied overall than their second-generation counterparts. These results are found to be consistent between the British and French data. As one of the first papers of its kind to distinguish between types of self-employed in terms of their higher satisfaction, the article’s finding that parents’ labour force status continues to have a significant impact on their children’s job satisfaction argues for a more systematic consideration of intergenerational factors in the analysis of labour markets.
Continuing thematically with a focus on entrepreneurship, the paper by Senik and Verdier uses a recent survey of the French population (INSEE, 2003), matched with French census data, and provides some of the first evidence on the subjective work values of immigrants and the importance of entrepreneurial ethnic networks in France. By reference to North African immigrants (in comparison to immigrants from Southern Europe and the native French population), the authors find that once the social capital specific to each group of immigrants is accounted for, the specificity of immigrants from North Africa in terms of work values becomes statistically insignificant or can even be reversed. These important findings suggest that ethnic social capital plays an important role in shaping attitudes towards work, and that entrepreneurial capital is a key element of social capital. Against this background, public policies, which promote entrepreneurial investment in discriminated minority groups, are put forward as key policy recommendations.
The study by Fargher, Kesting, Lange and Pacheco provides a departure from self-employment and entrepreneurship as focal points and examines the impact of basic cultural values and beliefs on job satisfaction across 20 countries in Eastern and Western Europe. Inspired by recent sociological scholarship, basic cultural values and beliefs in this study are defined by reference to traditional vs secular values and survival vs self-expression values, respectively. Utilising data derived from the European Values Study 1999/2000 and extending the analysis beyond previous investigations on organisational culture, the authors report a strong influence of a society’s broad cultural heritage on individuals’ well being at work. Interpersonal trust is identified as a particularly strong predictor of job satisfaction for both, Eastern and Western Europe and for both, male and female workers. The main difference between Eastern and Western Europe appears to be influenced primarily by the importance of family and religion. Considering that the effect of basic cultural values and beliefs on job satisfaction is found to be as strong as, and indeed sometimes stronger than the statistical impact of workers’ income, the study provides important insights and raises questions about the impetus for numerous motivational interventions by managers and consultants.
Having raised the issue of management intervention, Petrescu and Simmons pursue it further and investigate the effect of HRM practices on workers’ overall job satisfaction and their satisfaction with pay. A novel feature of their article is the use of two separate British data sets to develop complementary empirical results. After controlling for a large number of personal, job and firm-related characteristics, the study uncovers that HRM practices have a statistically significant, and in some cases a substantial, effect on workers’ overall job satisfaction and on their satisfaction with pay. Ongoing learning, job autonomy, some visual assessment of work performance, regular meetings with management, and employee involvement schemes are all found to be significant determinants of higher job satisfaction. However, the authors find little evidence in support of unionisation as a mechanism to improve satisfaction levels. Interestingly, the paper also associates overly dispersed pay structures with low levels of job satisfaction, which leads the authors to conjecture that there may be an offsetting negative effect on satisfaction and performance if otherwise effective HRM policies and practices also raise pay inequality in the workplace.
Finally, we turn to the analysis by Georgellis, Gregoriou, Healy and Tsitsianis who report that full-time workers with higher levels of job satisfaction before becoming unemployed tend to exhibit a higher speed of adaptation than those with low job satisfaction. Specifically, this paper finds that adaptation takes place in a non-linear fashion, with the speed of adjustment being higher for high earners, those with high pre-unemployment levels of life satisfaction and those who were most satisfied with their jobs before becoming unemployed. Based on data from the German Socio-economic Panel and using an Exponential Smooth Transition Autoregressive (ESTAR) model, the article also identifies that most of the adaptation takes place during the first year of unemployment, with adaptation speeds decreasing with unemployment duration. Habituation effects are suggested as a possible explanation for this observation. Since the literature provides only sparse empirical evidence on the dynamics of the adaptation to unemployment process, it is particularly noteworthy that this is the first study to model the dynamic path of adjustment towards pre-unemployment wellbeing levels as a non-linear process.
The papers in this special issue provide a European overview of contemporary empirical findings on subjective well being, with particular reference to the subjective evaluation of job satisfaction. All of the papers have been examined through the usual double-blind peer review system of the journal. We would like to express our appreciation to all reviewers for their input, advice and invaluable support, which helped authors to improve their earlier drafts. Finally, we extend our deepest gratitude to Professor Adrian Ziderman for his generous support, enthusiasm and guidance throughout the editorial process.
Yannis Georgellis, Thomas Lange
INSEE (2003), Histoire de Vie, INSEE, Paris