An analysis of the determinants of job satisfaction when individuals’ baseline satisfaction levels may differ

Abstract

A growing literature seeks to explain differences in individuals’ self-reported satisfaction with their jobs. The evidence so far has mainly been based on cross-sectional data and when panel data have been used, individual unobserved heterogeneity has been modelled as an ordered probit model with random effects. This article makes use of longitudinal data for Denmark, taken from the waves 1995–1999 of the European Community Household Panel, and estimates fixed effects ordered logit models using the estimation methods proposed by Ferrer-i-Carbonel and Frijters (2004) and Das and van Soest (1999). For comparison and testing purposes a random effects ordered probit is also estimated. Estimations are carried out separately on the samples of men and women for individuals’ overall satisfaction with the jobs they hold. We find that using the fixed effects approach (that clearly rejects the random effects specification), considerably reduces the number of key explanatory variables. The impact of central economic factors is the same as in previous studies, though. Moreover, the determinants of job satisfaction differ considerably between the genders, in particular once individual fixed effects are allowed for.

Acknowledgements

The first author is grateful to the Aarhus School of Business and the Department of Economics of the University of Aarhus for providing her with research facilities while visiting them as a Marie Curie post-doc fellow. We thank participants at seminars in Copenhagen (CAM) and Stockholm (SOFI) as well as at EALE 2004 in Lisbon and AEA 2004 in Mons for comments on earlier versions. The views expressed in the article reflect exclusively the opinions of the authors and do not necessarily correspond to those of the organization for economic cooperation and development. The usual disclaimer applies.

Notes

¹ Scholars of subjective well-being seem to disagree about the importance of personality as a determinant of life satisfaction; see Diener and Lucas (1999) for a survey.

² For a recent, useful discussion and summary of the experimental and field data literature on the meaningfulness of answers to subjective questions, see Bertrand and Mullainathan (2001).

³ See www.europeanemployeeindex.com

⁴ In the longer working article version of this article, we provide a more detailed survey of this literature.

⁵ The fixed effects ordered logit model is used also in the companion articles by Frijters et al . (2004a, b).

⁶ See also Frijters et al . (2004) and Ejrnaes and Pörtner (2002).

⁷ Further details regarding both the estimation procedure and the properties of the estimator can be found in Ferrer-i-Carbonel and Frijters (2004).

⁸ This vector of coefficients is obtained through the estimation of the random effects ordered probit on the whole sample and has var(ϵ _it )=1. Conversely, when using the fixed-effects estimator only a sub-sample of individuals is used. Thereby, these two models do not share the same normalization. See Frijters et al . (2004).

⁹ Concerning nonresponse and attrition the reader is referred to the article by Nicoletti and Peracchi (2002). The nonresponse rates in the satisfaction question are found to be very low.

¹⁰ We have carried out some simple cross-tabulations of ‘overall satisfaction’ and the seven different facets of jobs. These show indeed that they are positively correlated, but the correlations are far from perfect.

¹¹ More precisely, the magnitudes of the coefficients differ but their statistical significance does not.

¹² Still, for males the part-time work dummy carries a statistically significant, negative coefficient in the fixed effects model.

¹³ In corresponding estimations for six different facets of job satisfaction for males and females separately (but not reported here), we find that public sector employees are more satisfied with their working times and working hours but less satisfied with their earnings than private sector employees.