Kronenberg, Kristin and Kronenberg, Tobias (2011): Keeping up with the Joneses by finding a better-paid job - The effect of relative income on job mobility.
Download (224kB) | Preview
It has been shown that a person’s relative income – compared to a reference group – has a negative impact on self-reported happiness. This suggests that people who aim at increasing their happiness should try to find a better-paid job if their relative income is low. In this paper we study this hypothesis by estimating the effect of relative income on job mobility, using a dataset containing information on roughly four million Dutch employees. We consider three different reference groups: people who live in the same neighborhood, people who work for the same employer, and people who share certain demographic characteristics. Our findings suggest that workers compare their own income to that of their neighbors, and low relative income is associated with higher job mobility. We conclude that low relative income (compared to the neighbors) reduces workers’ happiness, and workers react to this by finding a new job which may offer the prospect of higher pay.
|Item Type:||MPRA Paper|
|Original Title:||Keeping up with the Joneses by finding a better-paid job - The effect of relative income on job mobility|
|Keywords:||Relative income, job mobility, happiness, social status|
|Subjects:||J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J62 - Job, Occupational, and Intergenerational Mobility
D - Microeconomics > D1 - Household Behavior and Family Economics > D10 - General
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R23 - Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
|Depositing User:||Kristin Kronenberg|
|Date Deposited:||11. Mar 2011 00:12|
|Last Modified:||16. Feb 2013 08:17|
Becker, G. S. (1981). 'Altruism in the Family and Selfishness in the Market Place', Economica, vol. 48(189), pp. 1-15.
Bergin, A. (2008). 'Job Mobility in Ireland', Economics, Finance and Accounting Department Working Paper Series, Department of Economics, Finance and Accounting, National University of Ireland – Maynooth.
Burdett, K. (1978). 'A Theory of Employee Job Search and Quit Rates', American Economic Review, vol. 68(1), pp. 212-220.
Clark, A. E., N. Kristensen and N. Westergård-Nielsen (2009). 'Economic satisfaction and income rank in small neighbourhoods', Journal of the European Economic Association, vol. 7(2-3), pp. 519-527.
Clark, A. E. and A. J. Oswald (1996). 'Satisfaction and comparison income', Journal of Public Economics, vol. 61(3), pp. 359-381.
Easterlin, R. A. (1974). 'Does Economic Growth Improve the Human Lot?', in (David, P. A. and M. W. Reder Eds.), Nations and Households in Economic Growth: Essays in Honour of Moses Abramovitz, New York: Academic Press Inc.
Easterlin, R. A. (1995). 'Will increasing the incomes of all increase the happiness of all?', Journal of Economic Behavior and Organization, vol. 27, pp. 35-47.
Ferrer-i-Carbonell, A. (2005). 'Income and well-being: An empirical analysis of the comparison income effect', Journal of Public Economics, vol. 89(5-6), pp. 997-1019.
Henneberger, F. and A. Sousa-Poza (2002). 'Beweggründe und Determinanten zwischenbetrieblicher Mobilität: Die Schweiz in einer internationalen Perspektive', MittAB, vol. 2/2002, pp. 205-231.
Kronenberg, K. and M. Carree (2010). 'Job and residential mobility in the Netherlands: the influence of human capital, household composition and location', MPRA working paper no. 25840.
Linneman, P. and P. E. Graves (1983). 'Migration and Job Change: A Multinomial Logit Approach', Journal of Urban Economics, vol. 14(3), pp. 263-279.
Luttmer, E. F. P. (2005). 'Neighbors as negatives: Relative earnings and well-being', Quarterly Journal of Economics, vol. 120(3), pp. 963-1002.
McBride, M. (2001). 'Relative-income effects on subjective well-being in the cross-section', Journal of Economic Behavior and Organization, vol. 45(3), pp. 251-278.
Molho, I. (1987). 'The migration decisions of young men in Great Britain', Applied Economics, vol. 19(2), pp. 221-243.
Sjaastad, L. (1962). 'The Costs and Returns of Human Migration', Journal of Political Economy, vol. 70(5), pp. 80-93.
Veblen, T. (1899). The Theory of the Leisure Class, New York: Macmillan.