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Job satisfaction, job match quality and labour supply decisions

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Abstract

This paper introduces job satisfaction into neoclassical theory of labour supply. This simple integration produces non-trivial results: job satisfaction is able to reduce disutility of labour, thus increasing labour supply; also, if job satisfaction is very high, labour could generate utility, while leisure could provide disutility. In this paper, job satisfaction, and thus job match quality, is specified in terms of appropriate collocation of the worker in the workplace; in short, the higher the matching between the investment in education and the task assigned in the workplace, the higher the job satisfaction. An empirical analysis substantiates the two main predictions of this paper, namely the key role of job satisfaction in time allocation and labour supply decisions and the plausibility of our view about job satisfaction.

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Notes

  1. According to Barmby et al. (2012), job satisfaction captures the pleasure–displeasure axis in Warr’s concept of subjective well-being (Warr 2007). Subjective well-being is defined as “a person’s cognitive and affective evaluations of his or her life” (Diener et al. 2002, p. 63).

  2. Actually, the literature on job satisfaction and labour supply is mainly empirical (see, e.g. Atrostic 1982; Akerlof et al. 1988; Drago and Wooden 1992; Golden and Wiens-Tuers 2006; Cornelißen 2009).

  3. For the sake of simplicity, we do not distinguish between “educational mismatches” and “skills mismatches”, since education is used in general terms, thus including also skills. Education and skills are indeed positively correlated (see, e.g. Vera-Toscano et al. 2017).

  4. Note that for \(\rho = - \;1\), a linear function \(u\left( {C,l} \right) = \alpha \cdot C + \left( {\beta - s} \right) \cdot l\) (with infinite elasticity of substitution) is obtained, whereas for \(\rho \to 0\) (by applying Hôpital’s rule), the previously used Cobb–Douglas function is obtained. Unlike the Cobb–Douglas function, in the CES function, the elasticity of substitution is always constant but not unitary; precisely, it is equal to \(\frac{1}{1 + \rho }\).

  5. Of course, training is a positive component of human capital, but the latter is a more general and wide concept that refers to the stock of knowledge, skills, experience, creativity, training and judgment possessed individually and collectively by the individuals in a society (Becker 1964).

  6. Precisely, the cited literature looks at occupation‐specific training. Birdi et al. (1997) look at training courses and work‐based development activity; Trevor (2001) comments on occupation‐specific training that produces occupation‐specific skills; Saks (1996) finds that the amount of entry training is significantly related to job satisfaction.

  7. Usually, the terms “job changes”, “changes of workplace” and “employer changes” are used interchangeably (Chadi and Hetschko 2014).

  8. In short, all these works find that job satisfaction increases with a new job (job change), but this positive effect gradually disappears.

  9. According to the report by Confindustria and Cerved (2017), the Italian firms that meet the requirements of small- and medium-sized enterprises are 136.114 in number. As a rule, these firms employ between 10 and 250 employees and produce a business turnover between 2 and 50 million euros.

  10. Overtime work hours are associated with increased work stress, fatigue and work–family interference, thus reducing happiness (Golden and Wiens-Tuers 2006).

  11. Indeed, it is not so trivial to answer to the Big 5.

  12. The empirical model overcomes the main statistical tests, namely correct specification of the model and normal data.

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Acknowledgements

The author wishes to thank the three anonymous referees for their many helpful comments and suggestions which have significantly improved the paper.

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  1. Department of Economics and Law, University of Cassino and Southern Lazio, Via S. Angelo, Campus Folcara, 03043, Cassino, FR, Italy

    Gaetano Lisi

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Lisi, G. Job satisfaction, job match quality and labour supply decisions. Int Rev Econ 65, 489–505 (2018). https://doi.org/10.1007/s12232-018-0311-1

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