low pay, higher pay and job satisfaction in wales

Low Pay, Higher Pay and Job Satisfaction in Wales

RICHARD J. JONES & PETER J. SLOANE

(Received January 2006; revised March 2007)

ABSTRACT Using the first six waves of the Welsh boosts to the British Household Panel Survey this

paper attempts to explain the determinants of overall job satisfaction and four facets of job satisfaction in

Wales, distinguishing between female and male workers and low-paid and higher paid workers. The

motivation of the paper is the claim made widely in the EU that low-paid jobs are jobs of inherently

low quality, in which case we should expect that job satisfaction would be lower in low-paid jobs. Since

there are proportionately more low-paid workers in Wales than in either England or Scotland we would

also expect to find that job satisfaction would be lower in Wales than in the other two countries.

Faible remuneration, remuneration plus elevee et satisfaction professionnelle au

Pays de Galles

RESUME A l’aide de six vagues des stimulations galloises de l’enquete par panel du menage

britannique, cet article tente d’expliquer les determinants de la satisfaction professionnelle globale et des

quatre aspects de la satisfaction professionnelle aux Pays de Galles, en faisant une distinction entre les

travailleurs de sexe masculin et de sexe feminin et ceux a faible remuneration et remuneration plus

elevee. La motivation de cet article est la revendication souvent faite en Union europeenne que les

emplois a faible remuneration sont des emplois de basse qualite par nature, auquel cas nous devons nous

attendre a ce que la satisfaction professionnelle soit plus basse dans les emplois a faible remuneration.

Etant donne qu’il y a proportionnellement davantage de travailleurs a faible remuneration au Pays de

Galles qu’en Angleterre ou en Ecosse, nous nous attendons egalement a trouver que la satisfaction

professionnelle soit plus basse au Pays de Galles que dans les deux autres pays.

Sueldos bajos, sueldos mas altos y satisfaccion laboral en Gales

RESUMEN Utilizando las primeras seis olas de los refuerzos Galeses a la Encuesta de Panel

de Hogares Britanico, este trabajo pretende explicar los determinantes de la satisfaccion

general laboral y cuatro facetas de la satisfaccion laboral en Gales, distinguiendo entre los

trabajadores femeninos y masculinos y los trabajadores con bajos sueldos y sueldos mas altos.

La motivacion del trabajo es la afirmacion comun en la Union Europea de que los trabajos

con sueldos bajos son intrınsicamente de baja calidad, por lo que deberıamos suponer que la

satisfaccion laboral serıa inferior en trabajos con bajos sueldos. Ya que existen

proporcionalmente mas trabajadores con sueldos bajos en Gales que en Inglaterra o

Richard J. Jones (to whom correspondence should be sent), WELMERC, Department of Economics, University

of Wales Swansea SA2 8PP, Wales. Email: [email protected]. Peter J. Sloane, WELMERC,

Department of Economics, University of Wales Swansea, and IZA, Bonn. Email: [email protected]

ISSN 1742-1772 print; 1742-1780 online/07/020197-18

# 2007 Regional Studies Association

DOI: 10.1080/17421770701348198

Spatial Economic Analysis, Vol. 2, No. 2, June 2007

Escocia, tambien esperarıamos encontrar que la satisfaccion laboral serıa inferior en Gales

que en los otros dos paıses.

KEYWORDS: Pay; job satisfaction; Wales

JEL CLASSSIFICATION: J0; J3; J4

1. Introduction

This paper attempts to tie together a number of separate strands. In recent years jobsatisfaction has increasingly attracted the attention of economists who have realizedthat the concept can be used as a proxy for the utility obtained from work.1 Instandard micro-economics textbooks this is normally portrayed as determined bythe trade-off between earnings and hours of work, since workers become moresatisfied as income from work increases, ceteris paribus , and less satisfied as hours ofwork increase. It is recognized, however, that utility is determined by much morethan just pay and hours. In particular, individuals obtain satisfaction from work itselfwhere this has intrinsic interest; they are concerned with job security, theirrelationships with co-workers and much more. A further strand of the literaturesuggests that women are more satisfied at work than men, (see, for instance, Clark,1996, 1997) and that there are significant gender differences in the determinants ofjob satisfaction; in particular, men’s job satisfaction is influenced more by pay thanthat of women (Sloane & Williams, 2000; Ward & Sloane, 2000). For this reason itis appropriate to run separate regressions for men and women. Both absolute andrelative pay have been found to be important determinants of satisfaction (Clark &Oswald, 1996).

Recently the question of work quality has come to the fore in the EU, wherethe problem of low pay has proved to be a particular issue. The Lisbon Summit of2006 regarded the goal of improving the quality of work as a complementaryobjective to those of full employment and social cohesion. Further, theCommission has argued that not only are some jobs low paid but also that thesesuffer a double penalty as they are also of low quality. Thus, in the 2001Employment in Europe Survey reference was made to the existence of a two-tierlabour market, the second tier consisting of jobs of low quality which suffered fromlow pay, job insecurity and lack of training and promotion opportunities. Further,it was found that 65% of workers in jobs of good quality reported high levels of jobsatisfaction compared to only 30% in jobs of low quality. Again, in the 2002Employment in Europe Survey it was claimed that in all member states jobsatisfaction was strongly and positively correlated with wages, job status and job-related skills acquired through training.

The Welsh Assembly government explicitly aligned itself to the EuropeanEmployment Strategy in Wales: a Better Country (September 2003). In the Skills andEmployment Action Plan for Wales 2005 improving the quality of jobs in Wales wasgiven particular prominence with the aim of ‘a Wales where everyone has the skills,motivation and opportunity to obtain good quality jobs that meet their aspirationsand abilities and where employers work with their employees and public sectoragencies to raise skills to the highest possible levels to support high quality jobs in agrowing economy’ (NAW, 2004, p. 5). In Wales: a Vibrant Economy (2005) theobjective was formulated as raising the quality of jobs in order to increase average

198 R. J. Jones & P. J. Sloane

earnings, and close the gap in earnings with the rest of the UK. Yet it is alsorecognized that the relatively low Welsh GDP per head is mainly due to lowemployment rates and lack of highly skilled jobs rather than low productivitywithin existing occupations. This would seem to pose a policy dilemma, since itmay be easier to close the employment gap which is concentrated among the lessskilled and older age groups through the creation of what are perceived to be low-quality jobs rather than upskilling the workforce.

In an earlier paper, Leontaridi et al . (2005) tested the above proposition forBritain using the British Household Panel Survey (BHPS) 1991�1997. Theirunivariate analysis found that the overall job satisfaction of low-paid workers washigher than that of higher paid workers and, while for higher paid workers higherearnings raised job satisfaction, in the random effects ordered probit model this wasnot the case for lower paid workers of either sex. Responding to these findings,Diaz-Serrano & Cabral Vieira (2005) attempted to replicate this study using theEuropean Community Household Panel for 14 countries over the period 1994�2001.2 They found that higher paid workers had significantly higher job satisfactionthan low-paid workers in 11 of their 14 countries, with the UK, Denmark and theNetherlands being the exceptions. However, the level of job satisfaction of lowerpaid workers was relatively high everywhere, ranging from 3.13 to 4.96 on a six-point scale, with the gap between the job satisfaction of higher paid and lower paidworkers being wider in the countries of Southern Europe. Whilst hourly wageswere a significant determinant of job satisfaction in their regression findings forhigher paid workers in most countries, the evidence was quite mixed for the lowerpaid and in three countries (the UK, France and Austria) the coefficient on wagewas negative and significant for the low paid. Sousa Poza & Sousa Poza (2000)suggest that we do not really have an explanation for the variation in job satisfactionacross countries, but distinguishing between work role inputs and outputs for 21countries using International Social Survey Program (ISSP) data they found thatdifferences in these across countries provide a partial explanation. Further, whilesome determinants of job satisfaction (such as having an interesting job and goodrelations with management) appear to apply to all countries, others (such as pay andjob security) seem to be country specific. As Clark et al . (2005) note, aggregatingdata across diverse populations may be a dangerous practice. In this paper, wecomplement the above literature by attempting to analyse variations in jobsatisfaction across the regions of an individual country.

2. The Data

The British Household Panel Survey (BHPS) is an annually conducted panel studyof British households. In one section of the questionnaire individuals are asked, allthings considered, how satisfied or dissatisfied they are with their present job overallon a scale 1 to 7, where 1 represents completely dissatisfied, 4 neither satisfied nordissatisfied and 7 completely satisfied. Similar questions using the same scale areasked about total pay, including any overtime or bonuses, job security, the actualwork itself and hours of work. To gain some idea of how the different types of jobsatisfaction are correlated with overall job satisfaction one can run ordered probitregressions of overall satisfaction with facets of job satisfaction entered asindependent variables (see, for example, Sloane & Williams, 2000; Ward & Sloane,2000). Thus, Ward and Sloane, using a sample of academics, ran such a regressionwith eight facets of job satisfaction (measured as dummies, 6�7�1, 1�5�0). It

Low Pay, Higher Pay and Job Satisfaction in Wales 199

was found that the most important determinant of overall satisfaction was theindividual’s satisfaction with the work he or she undertook, as in other studies, butalso that which facets were significant were gender specific with satisfaction withhours of work, satisfaction with promotion and satisfaction with salary only beingsignificant in the male equation. Nonetheless, the high explanatory power suggeststhat overall job satisfaction can act as a proxy for a number of facets of the job andcaptures job quality as perceived by the worker reasonably well.

While these measures of job satisfaction are subjective and we cannot be certainthat a particular score given by one worker will correspond to that given by anotherworker under the same circumstances, empirical research has indicated thatresponses to questions on job satisfaction are strong predictors of various formsof labour market behaviour, including voluntary quits, absenteeism and produc-tivity.3 We attempt, therefore, to explain the determinants of job satisfactionseparately by gender and split them according to whether or not the individual islow paid. Low pay is defined first as pay below two-thirds of median hourlyearnings for Britain as a whole, which makes it possible to compare the low paid inWales with their equivalents in the rest of Britain (lowpaid1), and second aspayment at or below the National Minimum Wage (lowpaid2). The sample consistsof workers aged from 18 to retirement age as this enables us to define those subjectto the National Minimum Wage. We examine the period from 1999 to 2004 usingwaves 9�14 of the BHPS, as prior to 1999 the sample size in Wales was too small toprovide robust estimates.

3. Methodology

We follow the established literature (see, for example, Clark & Oswald, 1996; Sloane& Williams, 2000; Hamermesh, 2001) in estimating a model in which job satisfactionis taken as a measure of the individual’s utility from work. This is a function not onlyof the level of the wage received by an individual and hours of work, as in thestandard indifference curve approach, but also of his or her pay relative to others, andof both individual and workplace characteristics. Thus we have

ui�u(y; y�; h; i; j); (1)

where u represents the utility of the i th individual obtained from work (i.e. jobsatisfaction), y is the wage and y+ is the comparison wage, h represents hours of work,and i and j are vectors of individual and job-specific characteristics, respectively.

We have no direct information on the comparisons an individual makes in orderto ascertain whether he or she is equitably paid, but there is some suggestion in theliterature that such comparisons tend to be narrowly drawn. We make the assumptionthat men will compare their pay with that of other men and women with that of otherwomen with similar characteristics.4 We assumed first that Welsh workers wouldcompare their pay with levels prevailing in Wales for the same age group, occupationand industry. Our comparison pay measure is derived using the Annual Survey ofHours and Earnings (ASHE) panel, the replacement of the New Earnings Survey.

Earlier studies have shown that in general most workers have relatively highlevels of job satisfaction, which is consistent with low-satisfaction workers leavingto find better jobs elsewhere. Job satisfaction is U-shaped in age (Clark & Oswald,1996), declines with increasing levels of education (Clark & Oswald, 1998; Sloane


& Williams, 2000), is lower for trade unionists (Borjas, 1979; Bender & Sloane,1998) and decreases with size of establishment (Idson, 1990).

The regressions are generally estimated by a random affects ordered probit, aslinearization of the rating scale, which would occur if estimation was by OLS, failsto account for the ordinal nature of the data. That is, we cannot assume that thedifference, say, between a ranking of 2 and 3 is the same as a ranking of between 6and 7. Ordered probit does not impose such a constraint on the data.5

4. Empirical Results

4.1. Some Descriptives

First we compare overall job satisfaction in England, Scotland and Wales usingwaves 9�14 of the BHPS for all workers, high-paid workers (with average earningsabove two-thirds of the median wage), low-paid workers below the threshold,high-paid workers (paid above the National Minimum Wage at the appropriatedate) and those paid at or below this threshold (see Table 1). We then test whetherthe mean reported level of satisfaction for these groups is significantly different ineach country using Hotelling’s T-squared generalized means test. The nullhypothesis is that the means of the two groups are equal and the alternativehypothesis is that the means are different. An F-statistic above the critical value forthe appropriate degrees of freedom leads to rejection of the null hypothesis. Thefigures in parentheses are the p-values associated with the test statistic* loosely theprobability of rejecting the null hypothesis of equal means when this is the case.

For all workers it can be seen that overall job satisfaction is significantly higher inWales relative to England and Scotland. The same applies to high-paid and low-paid

Table 1. Hotelling’s tests for equal means* satisfaction with job overall

England Wales Scotland

All workers

Mean 5.319 5.440 5.297

Wales (0.000) �Scotland (0.165) (0.000) �

High-paid workers (average earnings above two-thirds of median wage)

Mean 5.300 5.407 5.294

Wales (0.000) �Scotland (0.942) (0.000) �

Low-paid workers (average earnings at or below two-thirds of median wage)

Mean 5.402 5.484 5.289

Wales (0.054) �Scotland (0.005) (0.000) �

High-paid workers (average earnings above the minimum wage)

Mean 5.312 5.429 5.292

Wales (0.000) �Scotland (0.256) (0.003) �

Low-paid workers (average earnings at or below the minimum wage)

Mean 5.398 5.512 5.332

Wales (0.041) �Scotland (0.222) (0.006) �


workers, however they are categorized. Furthermore, levels of overall job satisfactionare generally higher for low-paid workers than high-paid workers in each country,with the exception of low-paid workers (measured relative to the median) inScotland, and in the case of England and Wales the difference in mean satisfactionbetween high-paid and low-paid workers is significant. Similar analyses were carriedout for satisfaction with job security, work itself, hours worked and pay. Wales hadthe highest mean rate of satisfaction with job security and this was significantly higherthan in England, though not for low-paid workers. Wales had significantly highersatisfaction with work itself for all groups considered relative to England and Scotlandand similarly for hours worked in most cases. It is only when we consider satisfactionwith pay that the picture changes. Here the mean for all workers is slightly lower inWales than in England (though not significantly so), but higher than in Scotland. Forhigher paid workers, the higher score in Wales is maintained. For lower paid workersthere are no significant differences across each country.

Table 2(a) compares average satisfaction levels within Wales for the four low-pay/high-pay groups. Low-paid workers in Wales have significantly higher levels ofoverall job satisfaction, satisfaction with the work itself and with the hours they workthan higher paid workers, regardless of the definition of low pay used. There is nosignificant difference in average satisfaction with job security between the groups.Finally, low-paid workers in Wales have significantly lower average satisfaction withtheir pay than higher paid workers, whichever definition of low pay is used. Wethen consider men and women separately, in Table 2(b) and 2(c), respectively.These confirm that women have higher mean levels of overall satisfaction than menin each of the four groups identified. This is also true for all other types of satisfactionin the case of higher paid workers. However, for low-paid workers this is reversed(measured as under two-thirds of the median) for total pay and work itself. Table2(b) shows that low-paid male workers in Wales have significantly higher overall jobsatisfaction, satisfaction with the work itself and with the hours that they work thanhigh-paid male workers for both definitions of low pay. There is no significantdifference in satisfaction with job security between the two groups, but low-paidmale workers in Wales have significantly lower satisfaction with pay than high-paidmale workers for both definitions. Likewise, low-paid female workers in Wales havelower satisfaction with their pay than high-paid female workers using either

Table 2(a). Hotelling’s tests for equal means*Wales

Lowpaid1* at or below

two-thirds of median wage


the minimum wage

Males and females High paid Low paid High paid Low paid

Average satisfaction with

Job overall 5.403 5.526 5.430 5.512

(0.005) (0.086)

Total pay 4.993 4.567 4.973 4.604

(0.000) (0.000)

Security 5.479 5.533 5.491 5.535

(0.280) (0.425)

Work itself 5.563 5.681 5.574 5.708

(0.007) (0.006)

Hours worked 5.261 5.390 5.268 5.399

(0.009) (0.016)


definition of low pay, and there is no significant difference between the two groupsin relation to average satisfaction with the job overall, the work itself, job securityand hours worked. The combination of lower satisfaction with pay and higheroverall job satisfaction for the lower paid is consistent with a compensatingdifferences story. That is, workers accept low pay because non-pecuniary aspects oftheir work compensate for low pay.

4.2. Regression Results

As noted above, we use a random effects ordered probit, disaggregating the datainto high-paid and low-paid groups and also using separate equations by gender,though not reported here. Because there are few observations for the cells for levels1 and 2 in the job satisfaction responses these have been combined to provide a six-point rather than a seven-point scale. In the analysis a given individual is treated as aseparate observation in each wave. Random effects allow for mood swinging whichis a type of unobserved heterogeneity. That is, depending on an underlying orcontinually changing emotional background the influence of an individual’s

Table 2(c). Hotelling’s tests for equal means*Wales, females only




the minimum wage

Females only High paid Low paid High paid Low paid


Overall 5.530 5.562 5.551 5.563

(0.548) (0.833)

Total pay 5.112 4.559 5.067 4.616

(0.000) (0.000)

Security 5.658 5.507 5.656 5.591

(0.143) (0.319)

Work itself 5.614 5.664 5.618 5.713

(0.372) (0.108)

Hours worked 5.415 5.435 5.406 5.472

(0.746) (0.307)

Table 2(b). Hotelling’s tests for equal means*Wales, males only




the minimum wage

Males only High paid Low paid High paid Low paid


Overall 5.294 5.448 5.320 5.384

(0.039) (0.047)

Total pay 4.891 4.583 4.887 4.574

(0.000) (0.002)

Security 5.324 5.457 5.341 5.396

(0.127) (0.595)

Work itself 5.519 5.718 5.535 5.695

(0.008) (0.071)

Hours worked 5.128 5.293 5.143 5.215

(0.051) (0.473)


emotional state or ‘mood’ may influence, either positively or negatively, his or herreported levels of job satisfaction at the time of interview irrespective of job,industry or personal characteristics.6 Any variables which are normally included insatisfaction equations are utilized, but those for which questions are not asked on aconsistent basis across waves, such as industry codes, are excluded. Wave dummiesare included in each of the job satisfaction equations, but are not reported. The payvariable has been deflated to 1999 prices. It is based on the normal hourly rate ofpay and usual hours. Regressions were run for overall job satisfaction and the fourfacets of job satisfactions for which data are available.

4.2.1. Overall job satisfaction. These equations (Table 3) show that the genderdummy is significant at the 5% level in the all-worker equation, indicating that,ceteris paribus , women are more satisfied with their jobs than men, in accordancewith the results from the earlier literature (Clark, 1996, 1997; Sloane & Williams,2000), but the gender variable is insignificant for both low-pay groups. The level ofreal pay is only significant for the low paid relative to the median group, and thecomparison wage is never significant.7 Married high-paid workers, but not low-paid workers, have higher levels of job satisfaction than other marital status groups.Job satisfaction declines with education for higher paid but not lower paid workers.Shorter hours raise job satisfaction only for the higher paid. Job tenure onlyaffects the job satisfaction of the higher paid. The same applies to promotionopportunities, presumably because these do not exist for most of the low paid.

Table 3. Satisfaction with job overall

Low paid and

high paid Highpaid1 Lowpaid1 Highpaid2 Lowpaid2

Male �0.143** �0.171** �0.316 �0.133* �0.521

(0.065) (0.079) (0.289) (0.074) (0.365)

Age (reference group: 18�29)

30� 39 �0.081 �0.104 �0.211 �0.044 �0.505

(0.078) (0.090) (0.301) (0.088) (0.354)

40� 49 �0.029 �0.100 �0.112 �0.008 �0.492

(0.093) (0.108) (0.417) (0.105) (0.499)

50� retirement 0.045 �0.037 �0.202 0.066 �0.642

(0.106) (0.125) (0.484) (0.121) (0.583)

Marital status (reference group: single)

Married 0.232*** 0.250*** �0.022 0.233*** 0.142

(0.073) (0.080) (0.171) (0.079) (0.194)

Widowed/divorced 0.132 0.186* �0.232 0.153 0.071

(0.097) (0.108) (0.220) (0.106) (0.250)

White 0.645* 0.788** 0.810 0.605* 0.955

(0.335) (0.359) (0.694) (0.345) (1.065)

Poor health �0.204** �0.143 �0.474*** �0.191** �0.384*

(0.086) (0.101) (0.178) (0.097) (0.211)

Highest qualification (reference group: no qualifications)

Degree or equivalent �0.257*** �0.301*** 0.146 �0.273*** �0.043

(0.090) (0.106) (0.177) (0.100) (0.205)

A level or equivalent �0.202** �0.245** 0.009 �0.272** 0.223

(0.101) (0.120) (0.182) (0.113) (0.214)

O level or equivalent �0.088 �0.050 �0.090 �0.065 �0.129

(0.096) (0.114) (0.167) (0.107) (0.198)


Workplace size effects are also stronger for the higher paid. We also experimentedby distinguishing between married individuals with and without a working spouse,but this did not influence the results* job satisfaction was significant for bothmarried groups. We also included a regional employment rate variable in an

Table 3 (Continued )

Low paid and


Other qualifications or equivalent �0.056 �0.013 0.038 �0.072 0.121

(0.119) (0.145) (0.193) (0.136) (0.223)

Log real average hourly earnings 0.100 0.304 0.916** 0.185 0.874*

(0.129) (0.260) (0.433) (0.222) (0.515)

Comparison wage�actual wage �0.005 0.006 0.233 0.001 0.234

(0.016) (0.026) (0.176) (0.023) (0.229)

Hours �0.007** �0.013*** 0.004 �0.011*** 0.004

(0.003) (0.003) (0.004) (0.003) (0.005)

Workplace size (reference group: less than 25)

25� 49 �0.145** �0.078 �0.356** �0.132* �0.253

(0.068) (0.078) (0.145) (0.075) (0.175)

50� 199 �0.188*** �0.151** �0.285* �0.190*** �0.238

(0.063) (0.071) (0.147) (0.069) (0.178)

200� 499 �0.136* �0.132 �0.060 �0.125 �0.089

(0.075) (0.082) (0.201) (0.080) (0.236)

500� �0.237*** �0.219*** �0.378* �0.254*** �0.185

(0.071) (0.076) (0.224) (0.074) (0.285)

Job tenure (reference group: less than 1 year)

1 to less than 2 years �0.058 �0.059 �0.078 �0.046 �0.095

(0.059) (0.069) (0.126) (0.066) (0.148)

2 to less than 5 years �0.225*** �0.254*** �0.079 �0.229*** �0.135

(0.056) (0.065) (0.125) (0.063) (0.147)

5 to less than 10 years �0.328*** �0.344*** �0.164 �0.338*** 0.010

(0.070) (0.078) (0.172) (0.076) (0.202)


(0.081) (0.088) (0.234) (0.086) (0.271)

20 years or more �0.051 �0.011 �0.191 �0.053 0.768

(0.132) (0.138) (0.513) (0.137) (0.672)

Industrial sector (reference group: private sector)

Other sector 0.393*** 0.366*** 0.034 0.393*** �0.234

(0.121) (0.134) (0.306) (0.130) (0.363)

Public sector 0.054 0.005 0.192 0.018 0.221

(0.061) (0.067) (0.167) (0.066) (0.194)

Managerial responsibilities �0.050 �0.037 0.085 �0.028 �0.243

(0.067) (0.071) (0.245) (0.070) (0.297)

Foreman 0.077 0.129** �0.205 0.118* �0.182

(0.060) (0.065) (0.168) (0.063) (0.202)

Travel-to-work time �0.002 �0.002 �0.007 �0.002 �0.006

(0.001) (0.001) (0.004) (0.001) (0.005)

Annual pay rise 0.224*** 0.244*** 0.285** 0.250*** 0.317**

(0.045) (0.050) (0.116) (0.048) (0.142)

Promotion opportunities 0.205*** 0.225*** 0.121 0.228*** 0.124

(0.045) (0.051) (0.108) (0.049) (0.136)

Employment rate 0.035 0.079 �0.088 0.038 �0.125

(0.079) (0.091) (0.180) (0.086) (0.234)

Observations 4,547 3,681 866 3,907 640

Notes : Standard errors in parentheses. *Significant at 10%; **significant at 5%; ***significant at 1%.


attempt to capture some of the demand-side effects, but this was never significant.It appears that the determinants of job satisfaction are stronger for the higher paidand that variables which have not been included in our model influence the jobsatisfaction of the lower paid.

4.2.2. Satisfaction with pay. In general this follows a similar pattern to the results foroverall job satisfaction (see Table 4). There are no significant gender differences forlow paid workers. The comparison wage variable is also significant at the 10percent level in the all worker equation and hours are significant for the low paidaccording to the median definition. Promotion opportunities are now significantfor all groups. When the sample is split by gender absolute pay becomes significantfor both higher paid men and higher paid women, but not for lower paid men orwomen, confirming the fact that lower paid workers are less concerned about levelsof pay than higher paid workers.

Table 4. Satisfaction with pay

Low paid and


Male �0.125* �0.273*** 0.378 �0.243*** 0.658*

(0.067) (0.079) (0.314) (0.075) (0.380)

Age (reference group: 18� 29)

30� 39 �0.008 �0.029 �0.160 �0.040 0.137

(0.079) (0.090) (0.326) (0.089) (0.366)

40� 49 0.147 0.059 0.450 0.079 0.854*

(0.094) (0.108) (0.452) (0.106) (0.519)

50� retirement 0.128 �0.007 0.581 0.023 1.111*

(0.108) (0.125) (0.526) (0.122) (0.604)


Married 0.147** 0.162** �0.141 0.136* �0.134

(0.074) (0.080) (0.192) (0.079) (0.203)

Widowed/divorced 0.082 0.075 �0.186 0.057 �0.045

(0.099) (0.108) (0.243) (0.107) (0.258)

White 0.095 0.446 �0.650 0.285 �1.415

(0.341) (0.371) (0.767) (0.358) (1.102)

Poor health �0.205** �0.119 �0.439** �0.133 �0.426*

(0.088) (0.100) (0.200) (0.098) (0.227)


Degree or equivalent �0.413*** �0.443*** �0.210 �0.427*** �0.277

(0.091) (0.106) (0.195) (0.102) (0.212)

A level or equivalent �0.109 �0.096 �0.230 �0.098 �0.214

(0.103) (0.120) (0.202) (0.115) (0.222)

O level or equivalent �0.226** �0.195* �0.322* �0.184* �0.389*

(0.097) (0.114) (0.186) (0.109) (0.207)

Other qualifications or equivalent �0.066 �0.017 �0.114 �0.011 �0.328

(0.121) (0.144) (0.216) (0.138) (0.233)

Log real average hourly earnings 0.442*** 0.862*** 0.050 1.006*** �0.431

(0.132) (0.261) (0.468) (0.226) (0.535)

Comparison wage�actual wage �0.032* 0.001 �0.066 0.017 �0.391*

(0.017) (0.027) (0.190) (0.024) (0.238)

Hours �0.007*** �0.008** �0.012** �0.008*** �0.009*

(0.003) (0.003) (0.005) (0.003) (0.005)


4.2.3. Satisfaction with job security. Again, the pattern of no gender differences forthe low paid is repeated (see Table 5). Some of the age variables are significant here(but only in the case of men when regressions are run separately by gender) andmarried minimum-wage workers have higher job satisfaction. There are alsosignificant tenure effects for this group. In the separate gender regressions higherpaid men with a non-working spouse and married women with a working spousehave higher levels of job satisfaction with job security.

4.2.4. Satisfaction with work itself. In this case there are no significant gender effectsfor any group or according to highest educational qualifications (see Table 6). Theresults are quite similar to those for overall job satisfaction, suggesting that


Low paid and



25� 49 �0.109 �0.089 �0.160 �0.072 �0.295

(0.069) (0.078) (0.157) (0.076) (0.180)

50� 199 �0.257*** �0.238*** �0.388** �0.253*** �0.332*

(0.064) (0.071) (0.161) (0.070) (0.187)

200� 499 �0.049 �0.149* 0.496** �0.127 0.499*

(0.075) (0.082) (0.217) (0.081) (0.243)

500� �0.032 �0.043 �0.109 �0.065 0.184

(0.071) (0.076) (0.245) (0.075) (0.295)



(0.059) (0.068) (0.134) (0.066) (0.151)

2 to less than 5 years �0.219*** �0.243*** �0.211 �0.196*** �0.383**

(0.056) (0.064) (0.134) (0.063) (0.152)

5 to less than 10 years �0.188*** �0.226*** 0.081 �0.213*** 0.234

(0.070) (0.077) (0.186) (0.076) (0.210)

10 to less than 20 years �0.160** �0.186** 0.037 �0.173** 0.098

(0.081) (0.087) (0.253) (0.087) (0.279)

20 years or more �0.302** �0.288** �0.305 �0.380*** 1.359**

(0.132) (0.138) (0.573) (0.138) (0.687)


Other sector 0.346*** 0.256* 0.484 0.259** 0.692*

(0.122) (0.133) (0.349) (0.131) (0.386)

Public sector �0.117* �0.223*** 0.318* �0.211*** 0.471**

(0.062) (0.067) (0.181) (0.067) (0.197)

Managerial responsibilities 0.038 0.005 0.437* � 0.001 0.439

(0.068) (0.071) (0.264) (0.070) (0.306)

Foreman 0.019 0.025 �0.143 �0.010 0.136

(0.060) (0.064) (0.180) (0.063) (0.205)

Travel-to-work time �0.003** �0.003* �0.018*** �0.003* �0.020***

(0.001) (0.001) (0.005) (0.001) (0.006)

Annual pay rise 0.095** 0.100** 0.052 0.103** 0.051

(0.045) (0.049) (0.125) (0.048) (0.145)

Promotion opportunities 0.216*** 0.231*** 0.231* 0.220*** 0.315**

(0.045) (0.050) (0.116) (0.049) (0.140)

Employment rate �0.001 0.037 �0.088 0.025 �0.268

(0.079) (0.090) (0.193) (0.086) (0.247)

Observations 4,545 3,680 865 3,905 640



Table 5. Satisfaction with job security

Low paid and high

paid Highpaid1 Lowpaid1 Highpaid2 Lowpaid2

Male �0.331*** �0.293*** 0.077 �0.292*** 0.292

(0.070) (0.085) (0.279) (0.081) (0.343)


30� 39 �0.241*** �0.176* �0.291 �0.174* �0.105

(0.081) (0.094) (0.290) (0.093) (0.333)

40� 49 �0.291*** �0.283** 0.138 �0.244** 0.319

(0.097) (0.114) (0.403) (0.112) (0.472)

50� retirement �0.151 �0.082 0.061 �0.043 0.241

(0.112) (0.132) (0.468) (0.129) (0.548)


Married 0.173** 0.212** 0.197 0.197** 0.304*

(0.077) (0.085) (0.162) (0.084) (0.179)

Widowed/divorced 0.136 0.176 0.035 0.193* 0.034

(0.102) (0.114) (0.208) (0.113) (0.231)

White �0.074 0.04 �0.062 0.030 �1.424

(0.343) (0.387) (0.656) (0.348) (1.061)

Poor health �0.092 �0.054 �0.306* �0.046 �0.411**

(0.087) (0.102) (0.170) (0.099) (0.197)


Degree or equivalent �0.224** �0.295*** 0.160 �0.226** �0.043

(0.096) (0.113) (0.167) (0.108) (0.188)

A level or equivalent �0.217** �0.259** �0.159 �0.238** �0.101

(0.107) (0.128) (0.173) (0.121) (0.195)

O level or equivalent �0.091 �0.113 �0.024 �0.074 �0.209

(0.102) (0.123) (0.158) (0.116) (0.183)

Other qualifications or

equivalent

�0.128 �0.161 0.049 �0.124 �0.120

(0.127) (0.156) (0.184) (0.147) (0.206)

Log real average hourly

earnings

0.158 �0.418 0.395 �0.229 0.029

(0.136) (0.272) (0.423) (0.234) (0.490)

Comparison wage�actual

wage

0.007 �0.050* �0.041 �0.031 �0.273

(0.017) (0.028) (0.170) (0.025) (0.216)

Hours 0.000 0.002 �0.002 0.002 �0.003

(0.003) (0.003) (0.004) (0.003) (0.005)


25� 49 �0.174** �0.145* �0.197 �0.179** �0.174

(0.070) (0.081) (0.139) (0.078) (0.162)

50� 199 �0.244*** �0.195*** �0.358** �0.248*** �0.218

(0.065) (0.074) (0.142) (0.072) (0.167)

200� 499 �0.139* �0.146* 0.094 �0.160* 0.186

(0.077) (0.085) (0.197) (0.084) (0.228)

500� �0.211*** �0.195** �0.049 �0.227*** 0.276

(0.074) (0.080) (0.214) (0.078) (0.271)


1 to less than 2 years 0.069 0.032 0.171 0.017 0.356**

(0.060) (0.070) (0.122) (0.068) (0.141)

2 to less than 5 years 0.046 �0.016 0.354*** 0.010 0.391***

(0.057) (0.066) (0.120) (0.064) (0.138)

5 to less than 10 years 0.116 0.060 0.431*** 0.052 0.728***

(0.071) (0.079) (0.167) (0.078) (0.195)


respondents may not be able to distinguish clearly between these two types of jobsatisfaction.

4.2.5. Satisfaction with hours of work. Longer hours reduce satisfaction for all groups(see Table 7). This is consistent with longer hours resulting either in fatigue orbeing disruptive to home or leisure pursuits.

5. Conclusions

Workers in Wales are generally happy in their work and this despite the fact thatWales is a low-wage economy. To what extent this is a reflection of a history ofhigh levels of unemployment (or inactivity) is difficult to determine, but the levelof job satisfaction is relatively high compared to England and Scotland. The findingthat women report higher levels of satisfaction than men confirms earlier findingsfor Britain, as does the relatively high job satisfaction expressed by low-paidworkers. Indeed, pay plays a surprisingly small part in determining workers’ overalljob satisfaction.8 The claim that low-paid jobs are ones of inherent low quality hasno basis, at least as far as Wales is concerned.Given that low-paid workers seem ingeneral to be happy with their work situation suggests that policy should focus ongetting the unemployed and the inactive into employment, regardless of whether ornot that employment is low paid, and there should be less concern about whatpolicy makers perceive to be low-quality work, as this does not appear to beconsistent with workers’ own perceptions about their jobs. Finally, one implication


Low paid and high


10 to less than 20 years 0.250*** 0.213** 0.221 0.212** 0.372

(0.083) (0.090) (0.225) (0.089) (0.257)

20 years or more 0.387*** 0.402*** �0.087 0.362** 0.081

(0.138) (0.146) (0.516) (0.145) (0.667)


Other sector 0.033 0.024 0.215 0.049 0.206

(0.123) (0.137) (0.298) (0.133) (0.345)

Public sector 0.055 0.083 �0.148 0.083 �0.157

(0.064) (0.071) (0.159) (0.070) (0.179)

Managerial responsibilities 0.143** 0.166** 0.397* 0.151** 0.202

(0.070) (0.074) (0.240) (0.073) (0.280)

Foreman 0.067 0.123* �0.282* 0.076 �0.139

(0.061) (0.066) (0.161) (0.065) (0.188)

Travel-to-work time �0.001 �0.000 �0.013*** �0.000 �0.020***

(0.001) (0.002) (0.004) (0.002) (0.005)

Annual pay rise 0.204*** 0.235*** 0.148 0.217*** 0.184

(0.046) (0.051) (0.113) (0.050) (0.134)

Promotion opportunities 0.266*** 0.247*** 0.329*** 0.261*** 0.307**

(0.046) (0.052) (0.105) (0.051) (0.129)

Employment rate �0.112 �0.114 �0.125 �0.105 �0.227

(0.080) (0.092) (0.176) (0.088) (0.225)

Observations 4,524 3,667 857 3,889 635



Table 6. Satisfaction with work itself

Low paid and high paid Highpaid1 Lowpaid1 Highpaid2 Lowpaid2

Male �0.029 �0.048 �0.265 �0.015 �0.280

(0.069) (0.080) (0.305) (0.076) (0.385)


30� 39 0.025 0.028 �0.264 0.061 �0.242

(0.081) (0.091) (0.317) (0.089) (0.374)

40� 49 0.169* 0.108 �0.044 0.177* �0.031

(0.096) (0.109) (0.440) (0.107) (0.527)

50� retirement 0.167 0.087 �0.144 0.141 0.001

(0.111) (0.127) (0.512) (0.123) (0.616)


Married 0.181** 0.194** 0.042 0.154* 0.292

(0.076) (0.082) (0.184) (0.080) (0.208)

Widowed/divorced 0.124 0.088 0.164 0.050 0.511*

(0.101) (0.110) (0.238) (0.108) (0.272)

White 0.619* 0.768** 0.159 0.762** �1.343

(0.337) (0.364) (0.720) (0.350) (1.186)

Poor health �0.152* �0.063 �0.469** �0.115 �0.439**

(0.088) (0.101) (0.186) (0.097) (0.222)


Degree or equivalent �0.098 �0.118 0.263 �0.099 0.153

(0.095) (0.108) (0.192) (0.103) (0.221)

A level or equivalent �0.107 �0.123 0.068 �0.142 0.166

(0.106) (0.123) (0.196) (0.116) (0.232)

O level or equivalent �0.011 �0.012 0.042 �0.009 �0.025

(0.101) (0.117) (0.182) (0.111) (0.213)


equivalent

0.081 0.083 0.218 0.019 0.294

(0.126) (0.150) (0.211) (0.141) (0.244)


earnings

0.037 0.180 0.805* 0.121 0.519

(0.133) (0.262) (0.454) (0.225) (0.539)


wage

�0.002 0.006 0.256 0.003 0.126

(0.017) (0.027) (0.185) (0.024) (0.241)

Hours 0.001 �0.005 0.012** �0.003 0.014**

(0.003) (0.003) (0.005) (0.003) (0.006)


25� 49 �0.098 �0.036 �0.256* �0.059 �0.254

(0.070) (0.079) (0.154) (0.077) (0.186)

50� 199 �0.180*** �0.143** �0.248 �0.162** �0.242

(0.065) (0.072) (0.156) (0.170) (0.189)

200� 499 �0.154** �0.142* 0.062 �0.118 �0.251

(0.077) (0.083) (0.217) (0.081) (0.252)

500� �0.291*** �0.284*** �0.387 �0.286*** �0.547*

(0.073) (0.077) (0.240) (0.076) (0.307)


1 to less than 2 years �0.110* �0.064 �0.264** �0.063 �0.324**

(0.060) (0.069) (0.132) (0.067) (0.157)

2 to less than 5 years �0.255*** �0.252*** �0.244* �0.242*** �0.270*

(0.057) (0.065) (0.133) (0.063) (0.157)


(0.071) (0.078) (0.184) (0.076) (0.218)



Low paid and high paid Highpaid1 Lowpaid1 Highpaid2 Lowpaid2


(0.083) (0.088) (0.250) (0.087) (0.289)

20 years or more �0.156 �0.144 0.529 �0.125 �0.039

(0.136) (0.141) (0.577) (0.140) (0.700)


Other sector 0.252** 0.237* 0.262 0.264** �0.072

(0.123) (0.134) (0.327) (0.130) (0.385)

Public sector 0.023 �0.003 0.250 0.002 0.442**

(0.064) (0.068) (0.179) (0.067) (0.209)

Managerial responsibilities �0.005 0.020 0.074 0.014 �0.139

(0.069) (0.072) (0.263) (0.071) (0.317)

Foreman 0.063 0.098 �0.089 0.094 �0.102

(0.061) (0.065) (0.178) (0.064) (0.215)

Travel-to-work time �0.001 �0.001 �0.006 �0.001 �0.001

(0.001) (0.001) (0.005) (0.001) (0.006)

Annual pay rise 0.189*** 0.197*** 0.261** 0.200*** 0.292*

(0.046) (0.050) (0.123) (0.049) (0.149)

Promotion opportunities 0.099** 0.115** �0.014 0.115** 0.038

(0.046) (0.051) (0.114) (0.049) (0.143)

Employment rate 0.026 0.017 0.087 �0.006 0.027

(0.080) (0.091) (0.189) (0.086) (0.245)

Observations 4,545 3,680 865 3,906 639


Table 7. Satisfaction with hours worked

Low paid and high


Male �0.056 �0.050 0.008 �0.034 �0.323

(0.066) (0.081) (0.268) (0.076) (0.322)


30� 39 �0.011 0.007 �0.113 �0.003 �0.240

(0.079) (0.092) (0.278) (0.089) (0.312)

40� 49 0.009 0.019 �0.054 0.041 �0.514

(0.093) (0.110) (0.387) (0.106) (0.441)

50� retirement �0.021 �0.021 �0.198 0.015 �0.776

(0.107) (0.128) (0.450) (0.123) (0.515)


Married 0.050 0.024 0.163 �0.001 0.314*

(0.074) (0.083) (0.154) (0.080) (0.163)

Widowed/divorced 0.030 0.078 �0.112 0.028 0.194

(0.099) (0.111) (0.198) (0.108) (0.211)

White 0.629* 0.801** �0.205 0.824** �1.377

(0.343) (0.383) (0.594) (0.361) (0.994)

Poor health �0.274*** �0.218** �0.440*** �0.218** �0.485***

(0.087) (0.103) (0.165) (0.098) (0.187)


Degree or equivalent �0.107 �0.031 �0.194 �0.063 �0.223

(0.092) (0.109) (0.159) (0.103) (0.173)

A level or equivalent �0.013 0.061 �0.072 0.032 0.065

(0.103) (0.124) (0.164) (0.116) (0.180)



Low paid and high


O level or equivalent �0.029 0.057 �0.238 0.034 �0.270

(0.098) (0.118) (0.150) (0.110) (0.167)


equivalent

0.079 0.161 0.036 0.143 0.016

(0.122) (0.151) (0.174) (0.140) (0.189)


earnings

0.349*** 0.342 0.561 0.332 0.874*

(0.130) (0.263) (0.406) (0.223) (0.461)


wage

0.046*** 0.048* 0.095 0.045* 0.254

(0.017) (0.027) (0.164) (0.024) (0.203)

Hours �0.025*** �0.035*** �0.013*** �0.029*** �0.015***

(0.003) (0.003) (0.004) (0.003) (0.005)


25� 49 �0.101 �0.083 �0.167 �0.091 �0.175

(0.069) (0.080) (0.133) (0.076) (0.153)

50� 199 �0.192*** �0.152** �0.396*** �0.205*** �0.108

(0.064) (0.073) (0.138) (0.069) (0.159)

200� 499 �0.034 �0.047 0.211 �0.051 0.250

(0.075) (0.083) (0.186) (0.081) (0.209)

500� �0.000 0.023 �0.163 0.007 �0.275

(0.071) (0.078) (0.204) (0.075) (0.245)


1 to less than 2 years �0.045 0.061 �0.242** 0.026 �0.243*

(0.059) (0.069) (0.121) (0.066) (0.139)

2 to less than 5 years �0.110** �0.068 �0.142 �0.069 �0.147

(0.056) (0.065) (0.118) (0.062) (0.133)

5 to less than 10 years �0.139** �0.140* 0.029 �0.137* 0.039

(0.070) (0.078) (0.162) (0.076) (0.181)


(0.081) (0.089) (0.216) (0.087) (0.241)

20 years or more 0.156 0.233* �0.040 0.186 0.423

(0.131) (0.139) (0.470) (0.137) (0.567)


Other sector 0.121 0.062 0.257 0.100 0.027

(0.119) (0.133) (0.285) (0.128) (0.324)

Public sector 0.003 0.000 �0.086 0.008 �0.048

(0.062) (0.069) (0.150) (0.067) (0.165)

Managerial responsibilities �0.158** �0.177 �0.277 �0.136* �0.177

(0.068) (0.072) (0.228) (0.071) (0.259)

Foreman �0.098* �0.053 �0.273* �0.067 �0.224

(0.060) (0.065) (0.156) (0.063) (0.178)

Travel-to-work time �0.003** �0.002 �0.008* �0.003* �0.004

(0.001) (0.001) (0.004) (0.001) (0.005)

Annual pay rise 0.158*** 0.175*** 0.106 0.187*** 0.075

(0.045) (0.050) (0.107) (0.048) (0.125)

Promotion opportunities 0.066 0.066 0.121 0.058 0.208*

(0.045) (0.051) (0.099) (0.049) (0.119)

Employment rate 0.038 0.074 �0.074 0.055 �0.053

(0.079) (0.090) (0.171) (0.086) (0.216)

Observations 4,543 3,677 866 3,903 640



of these results is that any attempt to reduce low-wage employment by regulationmay reduce the welfare of low-paid workers.

Notes

1. Thus, Hamermesh (2001, p. 2) suggests, ‘a potentially useful view is that job satisfaction is the resultant of the

worker’s weighting in his/her own mind of all the job’s aspects. It can be viewed as a single metric that allows

the worker to compare the current job to other labour market opportunities.’

2. A similar analysis using the same data set, but limited to six countries, was conducted by Pouliakos &

Theodossiou (2005). They attempted to deal with problems of selectivity bias but this forced them to use a

probit OLS approach, raising questions about the appropriateness of their identification restrictions. They found

that the higher paid were significantly more satisfied than the lower paid in three countries, but insignificant

differences were found in the other three (namely the UK, France and Denmark).

3. See, for example, Mangione & Quinn (1975), Hamermesh (1977), Freeman (1978), Clegg (1983), Clark et al .

(1998), and Clark (2001).

4. Major & Forcey (1985) found that individuals maximize similarity in wage comparisons by preferring same sex

and same job over across sex and combined sex wage information. Brown (2001) found that external market

comparisons dominated over internal organizational comparisons.

5. We make no attempt to test whether wages are endogenous. Thus wages and job satisfaction could be

determined simultaneously if wages reflect a compensating differential for, say, degree of risk, which in turn

lowers job satisfaction, or if more satisfied workers increase their effort, which in turn leads to higher wages.

However, finding appropriate exclusion restrictions in such a simultaneous system can be problematical. Lydon

& Chevalier (2002) used the characteristics of the respondent’s partner or spouse as instruments in their sample

of graduates, which produced significantly higher own-wage effects in the job satisfaction equation in line with

a compensating differentials story. However, this approach forced them to limit the analysis to married

individuals.

6. In using the BHPS, Taylor (2006) found that self-reported levels of job satisfaction vary significantly according

to the day of the week in which respondents are interviewed. However, the determinants of job satisfaction are

robust to the inclusion of day-in-the-week controls.

7. When we split the sample by gender the comparison wage is significant for men (low paid and high paid), and

also for low-paid men, but with the wrong sign in those cases. For the female sample as a whole, in contrast, real

earnings are significant.

8. However, Clark (2001), using the first seven waves of the BHPS, found that satisfaction with pay (together with

satisfaction with job security) is the most important determinant of quits, while the use of initiative, work itself

and hours of work are also significant in this respect. He concludes: ‘it is not that economists have been barking

up the wrong tree with the emphasis on wages and hours, but rather that they have not been barking up enough

of them’ (2001, p. 239).

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