On the Optimality of Intra-Firm Wage Difference on Employee's Job Satisfaction

Abstract

Using a unique data set which comprises survey data on about 50000 Japanese union workers, we examine the relationship between employee's job satisfaction and intra-firm wage dispersion, which is defined as Gini coefficient by firm.We fmd that the Gini coefficients ranging from 0.19 to 0.21 are optimal in terms of maximizing the employee's job satisfaction.