Do Different Work Characteristics Have Different Distributional Impacts on Job Satisfaction? A Study of Slope Heterogeneity in Workers’ Well‐Being

AuthorAekapol Chongvilaivan,Nattavudh Powdthavee
Date01 September 2014
DOIhttp://doi.org/10.1111/j.1467-8543.2012.00904.x
Published date01 September 2014
Do Different Work Characteristics Have
Different Distributional Impacts on Job
Satisfaction? A Study of Slope
Heterogeneity in Workers’ Well-Being
Aekapol Chongvilaivan and Nattavudh Powdthavee
Abstract
This article is an empirical study of slope heterogeneity in job satisfaction. It
provides evidence from the generalized ordered probit models that different job
characteristics tend to have different distributional impacts on the overall job
satisfaction. For instance, standard models tend to significantly underestimate
the effects of monthly salary and hours worked at generating the ‘highly’
satisfied workers, while lowering the incidence of the ‘very dissatisfied’ workers.
Although our results should be viewed as illustrative, we provide discussions of
their potential implications for employers and on how they could help with the
design of employment contracts.
1. Introduction
Most empirical work on the determinants of job satisfaction uses either linear
regression or single-index ordered probit and logit models. While the latter
account for discreteness and ordering of job satisfaction, they impose an
implicit cardinalization such that the trade-off ratios between, say, income
and work hours must be constant across the distribution of job satisfaction
(see, e.g., Boes and Winkelmann 2006). For example, if an increase in salary
of 2 per cent is required on average to offset a fall in overall job satisfaction
from an increase in the number of work hours by 1 per cent, then this
trade-off ratio is assumed to remain constant across different parts of the
job-satisfaction distribution. In other words, the standard ordered probit and
logit models do not allow for the potential heterogeneous effects that income
and work hours could have on the little-satisfied group as opposed to the
Aekapol Chongvilaivan is at the Institute of Southeast Asian Studies. Nattavudh Powdthavee is
at the London School of Economics and the University of Melbourne.
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British Journal of Industrial Relations doi: 10.1111/j.1467-8543.2012.00904.x
52:3 September 2014 0007–1080 pp. 426–444
© Blackwell Publishing Ltd/London School of Economics 2012. Published by John Wiley & Sons Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
highly satisfied group, thus discounting any possibilities of shortcuts to
achieving the highest incidence of highly satisfied workers without having to
make large sacrifices in other areas in return.
Recent econometric evidence, however, suggests that the implicit cardinal-
ization of subjective well-being data may be too strong. For instance, Boes
and Winkelmann (2010) have shown that income significantly reduces the
incidence of people reporting low satisfaction with life overall but does not
increase the incidence of high life satisfaction among men in Germany.
Mentzakis (2011) also reports a considerable heterogeneity in the compen-
sation variation for different types of health problems across different parts
of the life-satisfaction distribution. Despite finding statistically insignificant
average effect of grandparenthood on life satisfaction, Powdthavee (2011)
shows that being a grandparent increases the probability of individuals
reporting to be ‘very satisfied’ with life overall. In short, there is increasing
empirical evidence from studies that use less restrictive models that hetero-
geneity in subjective data matters in terms of what inferences we can draw
from the estimation results.
Our article follows the recent literature, and explores what happens if the
effects of many of the studied job characteristics, such as incomes, work
hours and promotion opportunities, are in fact different in different parts of
the job-satisfaction distribution. What lessons can we learn from this, and
what implications might this have on the employer–employee relations lit-
erature? To the best of our knowledge, empirical evidence on the heteroge-
neous effect of job characteristics on different parts of the job-satisfaction
distribution is scarce, and discussions on the implications of such evidence
are virtually non-existent. For this reason, our article aims to fill this gap in
the literature.
The remainder of this article can be structured as follows. Section 2 reports
our dataset and presents descriptive statistics of our main variables. Section
3 develops our empirical strategy based on the generalized probit model and
attempts to account for potential selection biases. Empirical results are dis-
cussed in Section 4. Section 5 concludes this article with some implications.
2. Data
The dataset comes from Waves 2–18 of the British Household Panel Survey
(BHPS).1This is a multi-purpose study and a nationally representative
sample of British households, containing over 15,000 adult individuals across
UK. The survey has been conducted between September and Christmas of
each year from 1991 to 2010, and is available for download from the UK
Data Archive (http://www.data-archive.ac.uk).
From Wave 1 onward, individuals are asked to rate in confidence their
levels of satisfaction with their jobs overall. Responses are given on a 7-point
scale, ranging from 1 ‘very dissatisfied’ to 7 ‘very satisfied’. We focus our
attention on individuals of working age (16–65) in paid employment and
Slope Heterogeneity in Workers’ Well-Being 427
© Blackwell Publishing Ltd/London School of Economics 2012.

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