Job Satisfaction, Work Environment, and Rewards:

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Job Satisfaction, Work Environment, and Rewards:
Motivational Theory Revisited


Lea Sell — Bryan Cleal
Abstract. A model of job satisfaction integrating economic and work environment variables was developed and used for testing interactions between rewards and work environment hazards. Data came from a representative panel of Danish employees. Results showed that psychosocial work environment factors, like information about decisions concerning the work place, social support, and influence, have significant impacts on the level of job satisfaction. Maximizing rewards did not compensate public employees to an extent that ameliorated the negative effects on job satisfaction of experiencing low levels of any of these factors whereas influence did not impact job satisfaction of private employees.

1. Introduction
Although job satisfaction is not considered an economic variable in itself, several studies in a labour economic context have highlighted that low job satisfaction is a determinant of resignations from the work place; see Akerlof et al. (1988), Blank and Diderichsen (1995), Clark et al. (1998), and Kristensen and Westergaard-Nielsen (2004). Other studies have shown an impact from job satisfaction on phenomena that are more difficult to observe directly, such as intention to leave the work place (Böckerman and Ilmakunnas, 2005), motivation and absenteeism (Keller, 1983; Tharenou, 1993), and counterproductive behaviour (Gottfredson and Holland, 1990). Work environment has been found to influence labour market outcomes in terms of early retirement (see Lund and Villadsen, 2005), employee long-term absence from work due to illness (see Benavides et al., 2001; Hemmingway et al., 1997; Lund et al., 2005), short-term sickness absence (see Munch-Hansen et al., 2009), and productivity (see Cooper et al., 1996).

Within traditional economic theory, work environment factors have tended to be modelled as job attributes, seen as hazards at work for which compensating wage differentials are to be paid. The theory of compensating wage differentials goes as far back as Adam Smith’s book, Wealth of Nations, from 1776, where equalizing wage differentials adjust the net advantages of different jobs. This makes it possible to achieve general labour market equilibrium when work places, preferences, and technologies are heterogeneous. Rosen (1986) reviews the various studies on the area and finds evidence of compensating wage differentials especially for physical working conditions, like shift work, heavy, dirty, or dangerous work. Other studies find no evidence of compensating wages differentials (see Ehrenberg and Smith, 1994) or, in cases where workers do receive compensating wages differences, that the compensation does not reflect their true preferences (see Lanfranchi, 2002).

Lea Sell — Bryan Cleal (author for correspondence), The National Research Centre for the Working Environment, Lersø Parkallé 105, 2100 Copenhagen, Denmark. E-mail: LABOUR 25 (1) 1–23 (2011)

DOI: 10.1111/j.1467-9914.2010.00496.x
JEL J6, J28, J30, J31, J45, J81

© 2011 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd, 9600 Garsington Rd., Oxford OX4 2DQ, UK and 350 Main St., Malden, MA 02148, USA.


Lea Sell — Bryan Cleal

According to the theory of compensating wages differentials, the equalization of total compensation is dependent on both perfect mobility of workers and perfect information for workers and firms. Both assumptions are questionable. Mobility may be, at least temporarily, limited by factors such as a high unemployment rate or family ties, restricting job choice to a specific mix of working hours, pay, or location. Likewise, full information regarding working conditions, especially when drawing in psychosocial work factors, cannot be known in advance, but will be experienced only in the actual work situation. Under these circumstances adverse working conditions can have an impact on the...
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