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Does Positive Attitude Matter Only for Older Workers? Evidence from Simultaneous Estimation of Job Satisfaction, Wage and Positive Attitude in the United States

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Abstract

The current study tests two hypotheses. First, it claims that the worker’s job satisfaction is related not only to the objective variable wage rate, but also to the psychological variable positive attitude, and that all three variables are simultaneously related. Second, the study predicts that the psychological variable positive attitude as a covariate of job satisfaction matters more for matured adults who are already settled in their desired jobs than younger workers who may still be in search of their preferred employment. Using data on matured adults and younger adults from the United States and following a two-stage procedure the current study estimates job satisfaction, wage and positive attitude equations in a simultaneous equations framework. The study confirms the presence of this simultaneous relationship, and demonstrates that the job satisfaction of matured adults in fact is related to both objective (wage) and subjective (attitude) factors. For younger workers, however, wage, and not positive attitude, emerges as a significant covariate of their job satisfaction. Since positive attitude plays a significant role in the determination of their wages, it is related to their job satisfaction only indirectly through higher wages. Positive attitude thus benefits both older and younger workers thorough different channels. The study further presents interesting results on the covariates of wage and positive attitude which remain disguised when the simultaneous relationship among these three variables is ignored.

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Notes

  1. Heckman and Kautz (2013) and Borghans et al. (2008) consider these traits as character skills and claim that, although difficult, they can change to some extent with intervention.

  2. In a different context, Borghans et al. (2008) have argued that, for the purpose of better policy effectiveness, the traditional utility function of an individual used extensively in the standard economics literature should be extended to accommodate both objective and psychological factors. Heckman and Kautz (2013, p. 23) further claim that “for many outcomes, the predictive power of character skills rivals that of measures of cognitive ability.”

  3. Mohanty (2013b) has recently demonstrated that an individual’s attitude can be improved through more frequent religious attendance, and consequently positive attitude can be treated as a psychological capital variable similar to human capital variables that can be improved through proper education and training. This variable should not therefore be confused with a personality trait that can be categorized strictly under one of the Big Five personality dimensions.

  4. In fact, using optimism, a different variant of positive attitude, Rauf (2010) has already demonstrated that job satisfaction is positively correlated with hopefulness and belief in future dimensions of optimism.

  5. Examining the role of work conditions and job characteristics in three realms of subjective well-being—life satisfaction, job satisfaction and satisfaction with work-life balance—Guzi and de Pedraza Garcia (2015) demonstrate that satisfaction in one domain also affects the other domains.

  6. In a different context, Graham et al. (2004) have demonstrated that happiness affects income and health positively.

  7. We thank a reviewer for helping us highlight the directions of these relationships.

  8. We assume the sign of UWW to be negative because higher wages may be associated with more demanding and risky work, and consequently as wage rises, job satisfaction is likely to increase at a decreasing rate. The sign of UAA, however, is unrestricted because with the improvement in attitude the job satisfaction may increase linearly, or at a decreasing rate, or even at an increasing rate.

  9. Use of the strongest response to generate the required binary variable is quite common in the literature (Mohanty 2009a, 2014). In fact, this produces a more reliable indicator of the variable under consideration than other binary variables that may be obtained by assigning 1 to other weaker choices.

  10. Note that \(y_{2}^{*}\) represents the worker’s satisfaction function for the job under consideration. It is a continuous variable and remains unobserved by the investigator. However, when this latent variable is positive, the worker’s response to the categorical job satisfaction question is favorable. The binary variable y 2 thus is generated by assigning 1 to this favorable response and 0 to unfavorable responses. In the same way, the observed binary variable y 3 is generated form the unobserved attitude function \(y_{3}^{*}\) which, when positive, leads to y 3 = 1.

  11. For a binary dependent variable, probit is the appropriate estimation method. However, to conduct an F-test comparable to that in the wage equation, linear probability method can also be used to estimate positive attitude and job satisfaction equations in both stages. To show the robustness of our endogeneity tests, we report both probit and linear probability results.

  12. The question used in this data to elicit information on job satisfaction is as follows: “How do you feel about the job you have now? Do you like it very much, like it fairly well, dislike it somewhat, or dislike it very much?” These choices are exactly the same as those in NLSY, 1979.

  13. We thank a reviewer for clarifying the interpretation of our positive attitude variable.

  14. Since the occupation categories are reported differently in 1987 and 2006, we could not generate two separate dummy variables for managerial and professional occupations in 1987, similar to those generated in the 2006 sample. Instead, we generated for that year two other occupation dummies (1) MANGPROF that includes workers in managerial and professional positions and (2) TECHNCAL that includes workers in technical occupations.

  15. Note that job security and job contract are known to be important explanatory variables in a typical job satisfaction regression (Green and Heywood 2011). Numerous studies in the literature find the evidence that job insecurity and temporary contract have significant negative effects on the worker’s overall job satisfaction (De Witte and Naswall 2003; De Witte 2005; Silla et al. 2009; Bruno et al. 2013). Unfortunately, however, the job contract variable is not available in our data set in either 1987 or 2006, the years already chosen for having necessary information on one of our key variables, positive attitude. Although the worker’s tenure with the current employer may act as a proxy for the type of job contract, our results in the next section indicate that it is not a good proxy. The information on the other important variable, job security, is also not available in either 1987 or 2006. However, the information on this variable is available in 1988. To extract the job security information for jobs in 1987 from the data available in 1988, we restricted the 1987 sample to all employed workers in 1987 who remained employed in the same jobs in 1988. Although it reduced the size of our 1987 sample to some extent, it helped us find the job security information for workers in 1987, a gain that is far superior to the loss of a few hundred observations only. Note that higher job security is invariably associated with a stable job contract, and consequently, we treat this job security variable in the 1987 sample as the best available proxy for both these characteristics.

  16. In a different context, Behrman and Taubman (1989) have shown that parental education and occupation genetically and financially affect the schooling and earnings of the children.

  17. Note that all these excluded variables are already included in the first-stage reduced form positive attitude equation. However, when they were included in the second-stage estimation of the structural positive attitude equation, not only their coefficients emerged statistically insignificant, but also the coefficients of other relevant variables turned out to be insignificant. Consequently, these workplace and employment related variables were excluded from the positive attitude equation to improve specification.

  18. The benefit variables included in the 1987 sample that are obtained from the 1988 survey are job security, retirement plan, profit sharing, training opportunity, provision for childcare, and promotion opportunity. All these variables except the job security are available in 2006, and consequently estimates obtained from both 1987 and 2006 equations are quite comparable.

  19. The first stage reduced form estimates can be obtained from the author on request.

  20. The first-stage estimates of structural job satisfaction equations which assume wage and positive attitude as exogenous variables can be obtained from the author on request. These estimates are not reported because they are irrelevant when wage and positive attitude have already been shown to be endogenous in Table 1. Moreover, it helps us to save space.

  21. The additional information may include finding appropriate instrumental variables or variables representing fixed effects. This may also involve identifying appropriate cut-off points for regression discontinuity design, or may require appropriate data for at least two time periods for propensity score matching. In the absence of these information, an appropriate causal analysis is unrealistic, and consequently without making any claim of causal connection, this study focuses primarily on establishing correlation among relevant variables.

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Correspondence to Madhu S. Mohanty.

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The author wishes to thank the Editor of this Journal, two anonymous reviewers, John Heywood, Joe Price, Bob Gladstone, Aman Ullah, Xiaohan Zhan, Zhen Cui, Devika Hazra, and the participants of the Western Economic Association International conference at Seattle, Behavioral Finance and Economics Conference at Burbank, California, and Restructuring of the Global Economy (ROGE) Conference at Rome, Italy for helpful comments. The usual disclaimer applies.

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Data Appendix

See Table 5.

Table 5 Variable definitions, means and standard deviations (SD)

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Mohanty, M.S. Does Positive Attitude Matter Only for Older Workers? Evidence from Simultaneous Estimation of Job Satisfaction, Wage and Positive Attitude in the United States. J Happiness Stud 19, 2373–2404 (2018). https://doi.org/10.1007/s10902-017-9930-6

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