Using a series of cross-sectional surveys, we investigate the sources of job satisfaction among Japanese male workers from 1955 to 1985. Our analysis focuses on income and disentangles the net effects of absolute income versus relative income during a period of high economic growth. The results indicate that both absolute income and relative income have substantial effects on job satisfaction after controlling for the respondent's demographic characteristics, job position in the labor market, and year of the survey. This conclusion suggests the significance of both the traditional economic and sociological approaches to the study of well-being and job satisfaction.
Job satisfaction refers to the evaluation of the enthusiasm, pleasure, and contentment that a worker finds in his or her paid employment (Warr 1999). This social outcome is significant for several reasons. First, it is associated with overall life satisfaction in cross-sectional analyses (Kalimo and Vuori 1990; Loscocco and Spitze 1990; Melamed et al. 1995; Pugliesi 1995; Roxburgh 1996) and in longitudinal studies of workers changing jobs (Barnett et al. 1995; Karasek 1979; Martin and Wall 1989). Second, job satisfaction improves mental and physical health (Faragher, Cass, and Cooper 2005). Third, job satisfaction promotes more productive employment relations, including better job performance (!affaldano and Muchinsky 1985; Petty, McGee, and Cavender 1984; Shore and Martin 1989), reduced absenteeism (Farrell and Stamm 1988; Melamed et al. 1995; Spector, Dwyer, and Jex 1988), and lower turnover (Horn et al. 1992; Lee and Ashforth 1996).
Prior research has investigated how job satisfaction is affected by intrinsic factors such as whether job activities are inherently interesting, stimulating, meaningful, or appropriately challenging (Kalleberg 1977). Characteristics of jobs that researchers have studied include: variety and scope (Xie and Johns 1995), physical security (Campion 1988; Oldham and Fried 1987), opportunity for skill use (Campion and McClelland 1993; Sevastos, Smith, and Cordery 1992), personal control and autonomy (Spector and O'Connell 1994; Warr 1990), job demands and complexity (Melamed, Fried, and Froom 2001; Warr 1990; Williams, Gavin, and Williams 1996; Xie and Johns 1995), supportive supervision (Griffin, Patterson, and West 2001; Miles, Patrick, and King 1996), participatory management (Kim 2002), family-friendly work policies (Saltzstein, Ting, and Saltzstein 2001), labor unions (Bender and Sloane 1998; Heywood, Siebert, and Wei 2002; Schwochau 1987), gender segregation (Bender, Donohue, and Heywood 2005; Wharton, Rotolo, and Bird 2000), sexual harassment (Laband and Lentz 1998), and racial harassment (Shields and Price 2002).
In terms of extrinsic factors, the key variable that has been investigated is financial reward (Freeman 1978; Gruenberg 1980; Kalleberg 1977; Kalleberg and Loscocco 1983; Lincoln and Kalleberg 1990). Although this literature confirms the positive effect of income on job satisfaction, the issue that has not been adequately addressed is disentangling the effects of absolute versus relative incomes on job satisfaction. Previous research has simply investigated the net effect of income in general. Although useful, the latter approach is not specific about the particular process by which higher income increases satisfaction.
JOB SATISFACTION AND ABSOLUTE VERSUS RELATIVE INCOME EFFECTS
If people with higher incomes derive satisfaction primarily because of their increased power to purchase goods and services per se, then increases in incomes for a population will tend directly to increase satisfaction for everyone who enjoys any income growth. This sort of process is typically assumed by economists when they specify a utility function in which well-being is deemed proportional to one's absolute income. As stated by Firebaugh and Tach (2005:6), "this is called the absolute income effect because happiness depends only on one's own income, and not on the income of others. …