Job satisfaction as a determinant of employees’ optimal well-being in an instrumental variable approach

The correlation between measures of a high level of job satisfaction and well-being is well documented in the literature; however, such a relationship may be potentially bidirectional. If an increase in job satisfaction affects optimal well-being, the reverse relationship can also be hypothesized. In addition, the relationship between job satisfaction and well-being may be polluted by the presence of omitted variables that can be correlated both with the satisfaction in the workplace and with a measure of optimal wellbeing. Using the sixth round of the European Social Survey, this paper utilizes an instrumental variable approach to isolate the effect of job satisfaction on optimal well-being variation that is independent of unobserved individual characteristics. After having controlled for the role of socio-economic profiles of interviewed individuals, our findings confirm a strong and significantly positive influence of job satisfaction on optimal well-being. The novelty of our analysis is twofold: firstly, we employ an instrumental variable approach to correct for endogeneity that might the effect of job satisfaction on well-being. Secondly, we use an innovative measure of optimal well-being, which we adopt as an outcome variable for measuring a multi-dimensional definition of well-being dealing with both hedonic and eudemonic streams.

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Notes

Eastern (post-communist) countries include Estonia, Bulgaria, Russia, Slovakia, Ukraine. Continental category includes Belgium, Germany, Switzerland, Nordic category includes Denmark, Finland, Norway, Netherlands, Sweden, Anglo-Saxon category includes United Kingdom and Ireland; Mediterranean countries are Spain, Portugal and Cyprus. Other is a residual category including the remaining countries which have controversial or mixed attributions (e.g. include both traits from post-communist and continental).

Results from the model do not change after varying the cut-point. In particular, if we separate micro enterprises (below 10 workers) from the others, the regression results are exactly the same.

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Authors and Affiliations

1. Department of Statistical Sciences, Catholic University, Largo Gemelli 1, 20123, Milan, Italy Emiliano Sironi

1. Emiliano Sironi