Do unfair perceived own pay and top managers’ pay erode satisfaction with democracy?

ABSTRACT

Many people are relatively unsatisfied with the democratic system as it currently exists. In this empirical research note, the authors present evidence that German workers, who perceive their own pay or top managers’ pay as unfair, are on average significantly less happy with the democracy in Germany. Thus, fairness perceptions in the labour market and of income inequality seem to have spillover effects on the overall satisfaction with the democratic system.

KEYWORDS:

• Democracy
• fairness
• inequality
• pay
• satisfaction

JEL CLASSIFICATION:

• D63
• D72
• J31

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Socio-Economic Panel (SOEP), data for years 1984–2012, version 29, SOEP, 2013, doi:10.5684/soep.v29. The year 2005 of the SOEP has been previously analysed in the context of unfair top managers’ pay by Cornelissen, Himmler, and Koenig (2011), who find a positive correlation between unfair perceived top managers’ pay and workers’ sickness absence.

² Note that our German data for the year 2005 measure satisfaction with democracy before the large economic and Euro crisis since 2008 and before the large refugee streams to Europe in 2015/2016. But in 2005, the labour market reforms of the AGENDA 2010 had already been in effect and chancellor Gerhard Schröder of the German Social Democrats lost the support of his own party and consequently the vote of confidence in the parliament, which led to new elections.

³ We exclude self-employed, civil servants and employees in education or internships from the sample, as their pay (determination and size) and career perspectives are not comparable to the ones of regular workers.

⁴ The complete regression results and descriptive statistics for the control variables can be requested from the authors.