Using linked employer-employee data for Britain we find that higher wages are associated with higher job satisfaction and higher job anxiety. The association between wages and non-pecuniary job satisfaction disappears with the inclusion of effort measures whereas the positive association between wages and job anxiety remains strong and significant providing no support for a compensating differential explanation, but rather for a ‘gift exchange’ type of reciprocal behaviour. No support is found for the proposition that within-workplace wage differentials are a source of job anxiety.
Source: “Do Higher Wages Come at a Price?” from Journal of Economic Psychology
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