Within-establishment wage inequality and satisfaction

We empirically model individual utility from pay as function of worker’s own wage and the earnings of all other workers within the same establishment. The aims of this paper are twofold: first, to study the mechanisms underlying the importance of relative wages in determining worker satisfaction; second, to assess whether high within establishment wage inequality leads, on average, to high satisfaction._x000d_ _x000d_ JEL Classification: C25, J28, J31, J33_x000d_ _x000d_ Key words: satisfaction, co-workers, envy, pride, wage inequality