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Does Job Security Increase Job Satisfaction? A Study of the
European Experience.
A. Nikolaou∗ I. Theodossiou∗∗, E. G. Vasileiou*
ABSTRACT: This study investigates the relationship between job satisfaction and job
security in European countries. In doing so, it attempts to take into account the
endogenous nature of the job security – job satisfaction relationship after controlling for
the various economic and personal characteristics. The results show that, even after
controlling for endogeneity, workers in jobs with low likelihood of job termination derive
higher utility from work compared to the workers in insecure jobs. This appears to be the
case for both men and women.
JEL Classification Code: J28 ; J16 ; J81
Keywords: Job satisfaction; Job security; Gender differences; Endogeneity
The financial support of the European Commission under the Fifth Framework Programme “Improving
Human Potential” (contract number: HPSE-CT-2002-00143) is gratefully acknowledged. The authors
would like to thank W. D. McCausland for helpful comments.
∗Department of Economics, University of Macedonia, Egnatia 156, GR 54006 Thessaloniki, Greece.
**Corresponding author: Ioannis Theodossiou, Centre for European Labour Market Research, Aberdeen
University Business School, Economics, University of Aberdeen, UK. And Department of Economics,
University of Macedonia, Greece.
1
1. INTRODUCTION
The marked changes in European economies during the last quarter of the twentieth
century, with the emphasis on technology and innovation were accompanied by an
increase in the so-called labour market flexibility (Harrison, 1998). In the past, many
firms had relied on long-term employer-employee relationships as means of human
resource management with the result of labour hoarding during periods of weak demand.
This enabled firms to attract and retain the best workers, and the loyalty made workers to
work harder on the behalf on their employer. Yet, during the last quarter of the century
these attitudes come to be considered as obsolete. Increases in the productivity resulting
from the investment in new technology induced firms to respond to periods of weak
demand by firing workers as soon as they did not need them. With company loyalty to
workers lowered, the likelihood of someone loosing his or her job increased dramatically.
Though this increased flexibility is viewed as having a positive effect on the employment
levels and as facilitating the job seekers’ access to the labor market, its impact on
individual well being remains unclear since flexible employment practices have
repercussions on job insecurity. This is what Harrison (1998) has named the “dark side”
of labour market flexibility. Indeed, Employment Outlook (1997) reported a substantial
decrease of job security for all European countries. For the U.S., Aaronson and Sullivan
(1998) and Blanchflower and Oswald (1999) found that from 1991 onwards, the
proportion of US workers who believed that they were “not at all likely” to lose their jobs
fell, despite decreasing overall unemployment and declining job security. Yet, Gottschalk
and Moffitt (1999), using the Survey of Income and Program Participation (SIPP) and
Panel Study of Income Dynamics (PSID), find no evidence of an increase in involuntary
job terminations and little evidence of a greater likelihood of a job ending in a spell of no
employment or of job changes being accompanied by wage declines. The 2002 report of
the European Commission on employment in Europe showed that movements out of
temporary jobs improved at the end of 90s, with more than 45% of workers entering a
permanent job within three years. Nevertheless, the risk of unemployment for temporary
employees is still up to four times higher than for people on permanent contracts. This
risk is particularly high for low skilled and older workers. Thus, a quarter of workers,
2
mainly young, women and low skilled, remain in low quality jobs, which are
characterised by job insecurity. Nickell et al (2002) found that, for British men, job
insecurity has substantially increased, particularly for higher skilled groups since the
early 1980s.
When assessing the desirability of labour market reforms towards flexible labour market
policies, the issue of job insecurity and its effects on job satisfaction are important to
policy makers as low job satisfaction implies lower productivity (Wright et al, 2002).
Thus, Brockner (1992) found that workers in firms which were downsizing through
redundancy schemes suffered from decreased motivation, morale, confidence and
increased stress, which were labeled as the “Survivor Sydrome”. Green et al, (2000)
showed that job insecurity is harmful for welfare, having repercussions on mental health
of employees and their families..
The aim of this study is to assess the effect of job insecurity on job satisfaction. An issue
that is largely ignored in the literature is that job security may affect workers’ job
satisfaction but it may also be the case that dissatisfied workers may face an increased
risk of losing their job, hence facing greater job insecurity the repercussions. Thus, this
study takes into account the endogenous nature of this relationship. The results show that,
after controlling for endogeneity, job security has a strong and significant positive effect
on job satisfaction.
Section 2 reviews the literature on the relationship between job satisfaction and job
security. Section 3 discusses the data used in this study, while Section 4 discusses the
estimation methodology. Finally, Section 5 presents the estimation results and Section 6
concludes.
2. JOB SATISFACTION AND JOB SECURITY
Following the work of Locke (1969), Hamermesh (1977), Freeman (1978) and Borjas
(1979), economists became increasingly interested in issues related to subjective
3
evaluations of the utility derived from work since job satisfaction is related to gains in
efficiency at an organisational and an individual level. Thus, Burchell et al (1999) and
Brockner et al, (1988) found that job insecurity may lead to a worsening of the employer
- employee relationship.
The literature provides evidence for a strong relationship between job satisfaction and
specific individual socio-economic characteristics, namely, gender (Clark, 1997; Kaiser,
2002; Moguerou, 2002), age (Clark and Oswald, 1996; Groot and Van de Brink, 1999),
education (Ward and Sloane, 1999), wages (Lydon and Chevalier, 2002), working hours
(Clark and Oswald, 1996; Drakopoulos and Theodossiou, 1997), trade union status
(Borjas, 1979; Freeman and Medoff, 1984; Lillydahl and Singell, 1993) and
establishment size (Lang and Johnson, 1994; Sloane and Williams 2000).
One of the most consistent findings in the job satisfaction literature is that the effect of
job security on job satisfaction is large and significant. Job satisfaction arising from job
security is a major factor affecting the quality of the employer-employee relationship.
Indeed, Blanchflower and Oswald, (1999) indicate that US workers in secure jobs record
higher levels of job satisfaction and European data support the strong connection between
the feeling of having a secure job and the reporting of higher job satisfaction1. The
International Social Survey Programme (ISSP (1989)) survey reveals that in eight out of
the nine OECD countries surveyed, job security was ranked as the most important
characteristic of a job among the respondents. Only in the Netherlands the respondents
ranked job security below having an interesting job. Finally, Moguerou (2002) using data
form the Survey of Doctorate Recipients found that job security is a major determinant of
job satisfaction in all sectors of employment for both males and females.
Blanchflower and Oswald (1999) investigated the relationship between job satisfaction,
job security and mental well-being using cross-section information from three sources
“the International Social Survey Programme” (1989), “the Eurobarometer Surveys”
1 See Eurobarometer 44.3OVR 1996, “Employment, Unemployment and Gender Equality”
4
(1995-1996), and “the US General Social Surveys” (GSS) data. They found that
expectations of possible job loss have the largest negative effect on job satisfaction.
Kaiser (2002) investigated cross-national differences in the determination of job
satisfaction by different type of contract, namely full-time permanent, full time fixed-
term, part time permanent, part-time fixed-term, and self-employment. Workers in
permanent full and part-time jobs with the highest level of job security appear to also
enjoy high job satisfaction. In contrast, those in fixed-term jobs and self-employment
were found to have low job security and low job satisfaction.
Souza-Poza and Souza-Poza (2000) used the ISSP to study the determinants of job
satisfaction2 and showed that job security significantly increases the individual’s job
satisfaction and it is ranked 7th in importance among all the determinants of job
satisfaction. Furthermore, the authors found that some determinants of job satisfaction
such as job security are country specific. Thus, for instance, self-perceived job security is
highest among Danish workers and lowest among French workers. Heaney et al, (1994)
surveying US car manufacturing workers found that chronic job insecurity had an
independent effect on job satisfaction and thus, they concluded that high likelihood of
losing the job may be a cumulative stressor for the worker with increasing effects over
time
The literature reviewed above shows that effects of job security on job satisfaction are
significant and important. Yet, the literature has largely ignored the issue of the
endogeneity in the job satisfaction - job security relationship. Thus, this study attempts to
assess whether the significant effect of job security on job satisfaction persists after
controlling for the endogeneity in this relationship.
2 Sousa-Poza and Sousa-Poza (2000) analysed job satisfaction on the assumption that it depends on the
balance between work-role inputs (education, working time, effort) and work-role outputs (wages, fringe
benefits, status, working conditions, intrinsic aspects). Thus, if work work-role outputs (“pleasures”)
increase relative to work-role inputs (“pains”), then job satisfaction will increase.
5
3. DATA AND MEASURES OF JOB SATISFACTION AND JOB SECURITY
The data set used in this study is taken from a single year –1996- of the Eurobarometer
44.3OVR, “Employment, Unemployment and Gender Equality”. The survey covers
issues on perception of employment, general attitudes toward work, work organization
and several socio-demographic variables. It contains questions concerning job
satisfaction in general and questions which are related to a number of specific aspects of
job satisfaction. In this study a sub-sample of 6.326 workers from Denmark, Finland,
France, Greece, the Netherlands, Spain, and the United Kingdom is used. Non-employed
and self-employed individuals, members of the armed forces and people older than 65
years of age are excluded from the sample.
The measure of “overall job satisfaction” is derived from the following question:
“How satisfied would you say you are with your job?”
The answers are ranked on a scale from 1 (completely dissatisfied) to 7 (completely
satisfied. This is the dependent variable to be explained by a set of personal and job
characteristics.
Job security can be measured with a number of ways. According to Weiling (2000), job
security is the likelihood of keeping a job until the person decides otherwise, or it can be
measured in terms of unemployment prospect. In some surveys, respondents are asked
whether they agree or disagree with the statement “My job is secure” (Bender and
Sloane, 1999). However, this type of question may lead the respondents to consider the
wider implications of insecurity, such as the stability of their employment conditions
(Burchell et al, 1999). The Economic Outlook (OECD, 1997) calculates job security as
6
the simple average of the percentage of individuals reporting favorable answers to a
series of questions regarding facets of job security3.
In this study job security is measured in terms of unemployment expectations. The
measure is based on the following question:
“How likely or unlike is it that you will lose your job or decide to leave your employer or
forced to close your business for some reason over the next 12 months?”
Individuals are required to respond on a four-point scale, (ranging from very likely to
very unlikely).
Several authors (Nickell et al (2002), Aaronson and Sullivan (1998), Green et al (2000),
Green et al (2001)) have also used this measure of job security4. Campbell et al (2001)
using data from the British Household Panel Survey (BHPS), waves 6 and 7, found that
the expectations of unemployment reported by the workers are strong predictors of actual
unemployment experiences occurring in the subsequent year.
Figure 1 shows that the most satisfied workers are in secure jobs. Approximately only
3.4% of satisfied workers in 1996 viewed their job as being insecure in terms of
continuation of the employment contract. For those who are dissatisfied with their jobs,
32.52% of workers believe unemployment to be “very likely”. Thus, the fear of
joblessness is confined to workers with low job satisfaction. However, it might be argued
3 Job security according to the OECD is measured by the answers to the following questions: 1) I am
frequently worried about the future of my company; 2) My company offers a level of job security as good
as, or better than, the job security offered in most other companies in our industry; 3) I can be sure of a job
with my company as long as I perform well; 4) How satisfied are you with your job security?
4 Unfortunately, there is lack of available datasets on job security combined with job satisfaction. In our
examination the question is only present in waves 6 and 7 (1996 and 1997) of the BHPS, in Eurobarometer
44.3OVR, “Employment, Unemployment and Gender Equality”, in the cross-sectional dataset US General
Social Survey (GSS) in the most years since 1977. This might explain the limited research output on this
subject.
7
that dissatisfied workers may cause their own jobs to become less secure. Whether the
correlation shown in Figure 1 is spurious due to endogeneity or not, is the focus of this
paper. Thus this study attempts to assess the effect of job security on job satisfaction after
controlling for the possible endogeneity in the relationship.
The variables included in the model are defined in the Appendix Table 1. Table 2 reports
the sample means and the means of the sample split by gender.
4. EMPIRICAL METHODOLOGY-THE ORDERED LOGISTIC REGRESSION
APPROACH
The methodology employed is to run logistic regressions that relate the ordered
categorical dependent variable namely job satisfaction to job security and a number of
personal and job characteristics.
A k-category ordered logistic model (McCullagh (1980), Anderson and Philips (1981)
and Ashby et al (1986)) is defined as:
iiiiij
j
j
jJPLSa
p
p
L
εζδγβ
+++++=
−
=)
1
ln( (1)
1,...,2,1 −= kj where is the probability of being assigned to one of the categories
, is job security,
j
p
kii ,...,2,1 ++ S
L
is a vector describing occupational status, is a
vector describing personal characteristics, is a vector of job characteristics and
P
J
ε
is an
error term. The intercepts j
α
vary across categories and satisfy the constraints
. The workers in the sample are assumed to be categorised
independently of each other. Taking the antilog of the estimated logit, one can obtain
, that is, the odds ratio.
121 ... −
≤≤≤ k
aaa
)1/( JJ PP −5
5 The interpretation of logistic regression coefficients is discussed in Gujarati (2003).
8
Since it is likely that job security affects job satisfaction and vice versa there is a possible
endogenous relationship between these variables. In order to control for endogeneity the
instrumental variables approach is used as follows:
In the first stage a bivariate logit is estimated in order to obtain the predicted values for a
worker’s job security. The following bivariate logit regression is estimated:
,
I
i
II
i
I
ii ZaXS
εβ
++= (2)
where S is job security, I
Z
is a vector of instruments to identify the job security
equation, X is a vector of independent variables, are the estimated coefficient
vectors, and is the error term.
II
a
β
,
I
ε
The logit model for job security is a reduced form regression, thus it includes all of the
variables included in the job satisfaction regression (equation 1), plus three variables
which are assumed to affect the probability of someone being in a secure job, but do not
affect the individual’s job satisfaction. Hence, the chosen instruments should be
correlated with job security but uncorrelated with job satisfaction.
These variables are generated as follows:
(1) The respondents are asked how important having a secure job is for them when
they are in the process of choosing a job. A four-point scale is used to rank the
importance of this preference. This is collapsed to a binary variable- “secure job is
very important” (secu_vi). This variable takes the value 1 if the individual’s
reported the highest score in the four-point scale and 0 otherwise.
(2) The respondents were also asked whether they were willing to pay more taxes for
the creation of more jobs. This variable (paytax_j) is set equal to 1 if the
respondent replied affirmative to the above question and 0 otherwise.
9
(3) The third variable is equal to 1 if the respondent is living in parents’ house and 0
otherwise (live_parhou).
The first two variables are attitudinal, which may determine individuals decision to
accept a job that offers high job security at the time of hiring but one should not expect
them to have independent effects on the current job satisfaction. The latter variable
reflects the fact that individuals who live with their parents may be less concerned with
issues of job security than otherwise. Again, this should not be expected to affect the
satisfaction with the current job.
However, the choice of identifying restriction in the IV procedure is always ad hoc. In
general, there is no compelling theoretical reason why these variables should or should
not be correlated with job satisfaction. In order to further ensure that the above variables
are not correlated with job satisfaction, the chosen instruments are regressed separately
against job satisfaction and the errors s
ε
, p
ε
, t
ε
of these regressions are retrieved.
Thus, the following regressions are estimated:
sS bY
ε
α
+
Φ
+
=
(a)
P
bYp
ε
α
+
Φ
+
=
(b)
tT bY
ε
α
+
Φ
+
=
(c)
where , and are the variables “secure job is very important”, “live in parents
house” and “ the worker is willing to pay more taxes for the creation of more jobs”
respectively, is job satisfaction
S
YP
YT
Y
Φ6 in form of a set of dummies variables and s
ε
, p
ε
, t
ε
are the errors to be retrieved respectively. Thus,
€
s
ε
€
t
ε
,
€
p
ε
are the instrument variables
which will be used in the job security regression (equation 2).
In the second stage the estimated coefficients from (2) are used to obtain the predicted
values
€
S. In the third stage
€
S are included in the job satisfaction order logit regression
6 Job satisfaction is spilt in a set of 7 dummies variables equal to 1=not at all satisfied to 7=very satisfied
10
(equation 1). As a rough test of whether the above variables are appropriate variables for
the identification of the selectivity variable, a t-test was used to assess the significance of
each of the above variables (regressed separately) in the job satisfaction equation. The t-
value for two of the variables,
€
s
ε
and
€
p
ε
, was 0.22 and 1.25 respectively, indicating that
these variables were not significant at conventional levels, but
€
t
ε
was. This tentatively
suggests that at least two of the restrictions for identifying the selection effects in jobs
with low or high termination likelihood were adequate. This is regarded as salutary, since
one could assume that the selectivity variable is appropriately identified.
5. THE RESULTS
This section presents: a) the results of the job security estimation (table 1 column 1), b)
the estimation results of the job satisfaction equation for the whole sample after
controlling for endogeneity, (table 1 column 2) and c) the estimation results of the job
security and job satisfaction disaggregated by gender (table 1, column 3-5 and 4-6
respectively).
5.1 The Logit model -job security (Overall Sample results)
Column 1 in Table 1, reports briefly the results on the job security estimation since this
issue is not the focus of the paper. A Likelihood Ratio (LR) statistical test is used to
examine whether the instruments are correlated with job security. It showed that the
variables used as instruments namely,
€
s
ε
€
t
ε
,
€
p
ε
, are all jointly significant7. The t-test also
shows that
€
s
ε
,
€
p
ε
are also individually significant.
The results show that job security is higher among married individuals and those who use
their skills in their current job. In addition the results support Blanchflower and Oswald
(1999) who showed that workers in the public sector have less fear for their job than in
private sector. Clark (1997) found that those who work at smaller firms are less likely to
7 They are all jointly significant at 1% level ( =42.2, with three degrees of freedom).
2
x
11
loose their jobs. Aaroson and Sullivan (1998) also found that workers in small firms
report higher job security. They argued that this is misleading since this usually concerns
the size of the work site and not the size of the firm. This study suggests that the firm size
does not appear to influence the individual’s job security. Long job tenure is an important
determinant of greater job security as this shows long-term employer-employee
relationship and a good job-match (Okun, 1981). The odds of reporting a greater job
security are higher for those who have long-term contract by a factor of 2.24 compared
with those with short tenures who unambiguously have the greatest job insecurity. The
results are compatible with the findings of Campbell et al (2001).
In line with the OECD (1997) report, this study reveals that job security is higher among
older workers compared to younger ones with a maximum around 53-55 years old. This
finding suggests that young people have more possibilities to become unemployed. This
may reflect the fact that younger workers exhibit higher labour market mobility since
they are in the process of finding the most suitable for them labour market career.
A number of studies established a positive link between job security and highly educated
workers (OECD, 1997; Blanchflower and Oswald, 1999). Kaiser (2002) has also reported
a significant positive effect for Portugal among the five European countries which were
investigated (The Netherlands, UK, Germany, Denmark, Portugal). The results of this
study do not suggest a significant relationship between education and job security but in
contrast to Burchell (1999) who found that higher social class does affect job security the
present study suggests that occupational status has not a significant effect on the
likelihood of a worker retaining his or her current job.
Brown Johnson et al (1992) found that unionised employees perceived job security as
more important that their non-union employees and seem willing to trade off wages for
job security. Furthermore, Bender and Sloane (1999) and OECD (1997) showed that
union membership appears to offer protection from job insecurity. The current study
confirms the above findings.
12
Finally, workers in Greece, Spain and Netherlands have higher odds of reporting higher
job security compared to workers in Great Britain (the omitted variable).
5.2 Endogeneity correction results (Overall Sample results)
Table 1 column 2 reports the estimation results of the job satisfaction regression after
correcting for the effects of the endogenous relationship between job security and job
satisfaction8. They show that the effect of job security on job satisfaction is significant
and large. The odds of reporting higher level of job satisfaction of those who feel that the
have high job security are 5.8 higher compared to those who are employed in a job with
high likelihood to be terminated. Importantly, this effect appears to be twice as high as
that reported in the uncorrected estimates reported in the Appendix (Table 3). This shows
that the problem of endogeneity is important and that ignoring the simultaneous nature of
job security - job satisfaction relationship results in an underestimation of the true effects.
The present results are in line with Blanchflower and Oswald (1999).
A number of interesting issues are also highlighted in Table 1, column 2. The odds of
reporting higher level of job satisfaction increase with the educational level. Thus, for an
educated individual the odds of reporting higher levels of job satisfaction are 1.28 greater
compared to those of low-educated (the reference group).
Lang and Johnson (1994) found that firm size acts as a contingency variable only
affecting satisfaction, as it interacts with other determinants of job satisfaction9. Thus, for
8 The estimation results when the issue of endogeneity is not taken into account are reported in the
Appendix (Table 3), for completeness but are not discussed in detail.
9 Lang and Johnson (1994) use the Scneider’s Attraction-Selection-Attrition (ASA; 1987) framework to
examine the effects of firm size on job satisfaction. In this framework, firm size affects job satisfaction as it
interacts with the employee characteristics. Attraction refers to the decision of potential employees to join
or leave organisations according to their perceptions of correspondence of interests and /or values.
Similarly, managers select recruits according to their own perceptions of that correspondence (Selection).
Over time, either the firm integrates the employees in the workforce or the employees eventually quit
(Attrition).
13
instance, for smaller firms the initial employer – employee attachment affects
significantly job satisfaction. However, for bigger firms, the quality of the relationship is
important. Drakopoulos and Theodossiou (1997) showed that people who work in small
firms report higher job satisfaction compared to the remainder. This is consistent with the
findings of this study where the odds of reporting higher levels of job satisfaction for an
individual who is employed in a small firm are 1.21 times greater compared to those who
work for big companies (the reference group). This maybe due to the fact that employees
in smaller firms may enjoy a higher employee involvement in the work organisation, a
wider diversity in the working activities, or a higher opportunity of assuming
responsibility compared to their counterparts employed in bigger firms.
The relationship between union status and job satisfaction has attracted considerable
interest in the literature. The literature suggests that though union membership is
positively related to wages, it has a negative effect on the job satisfaction due to the so-
called ‘exit voice’ motive (Freeman and Medoff, 1984; Blanchflower and Oswald, 1999,
Drakopoulos and Theodossiou, 1997) that is, dissatisfied union workers tend to remain in
their jobs and express their complaints through the union whereas dissatisfied nonunion
workers tend to leave (Miller, 1990; Bender and Sloane, 1998). Lillydahl and Singell
(1993) found that, although unionised members feel more satisfied with salaries, benefits
and job security, their satisfaction with all other facets of their jobs is so low that their
reported job satisfaction is overall lower compared to that of the non-unionised
employees. The findings of this study show that union membership is associated with a
lower job satisfaction. The odds for a union member to report high job satisfaction are
lower compared to those who do not belong to a trade union by a factor 0.87.
Job satisfaction levels tend to be higher among those in high-skilled, non-manual
occupations such as managers and professionals. The odds of reporting high job
satisfaction are 1.20, 1.17 and 1.11 for managers, skilled and clerks, respectively,
compared to those who work in unskilled occupations (the reference group). Kaiser
(2002) showed that professionals and technicians are more satisfied with their job
compared to all other occupations. This implies some sort of an occupational hierarchy
14
exists in terms of job satisfaction. Importantly, workers who report that they use their
skills and experience when they perform their job tasks, are twice more likely to report
high job satisfaction compared to the remainder.
In contrast to the findings of Blanchflower and Oswald (1999) who found that being a
public sector employee has a positive effect on job satisfaction this study shows that the
odds of reporting higher level of job satisfaction are 1.12 times higher for those who
work for the private sector compared to those in the public sector. Yet this may reflect the
fact that the positive effect of the public sector employees’ job satisfaction has decreased
sharply through the 1990s, as Gardener and Oswald (1999) have found.
Finally, the workforce in Denmark, Finland and the Netherlands has higher odds of
reporting higher job satisfaction compared to workers in Great Britain (the omitted
variable). According to Sousa-Poza and Sousa-Poza (2000), the high level of reported job
satisfaction in these countries could be explained by the relative high work-role outputs
compared to the work-role inputs. On the other hand, Greek, French and Spanish workers
have higher odds of reporting lower levels of job satisfaction than their British
counterparts by a factor of 0.54, 0.70 and 0.77 respectively.
5.3 Job security and Job satisfaction -Differences by gender
Studies on job security and job satisfaction have shown important differences with
respect to gender (Burchell, 1999; Clark, 1997). Research into job satisfaction issues has
shown that women consistently report higher satisfaction with their jobs than men (Clark,
1997, Blanchflower and Oswald, 1999) in the UK. Ward and Sloane (1999), argued that
“this is surprising given that studies across occupations and countries have found
substantial and significant male-female earnings differentials and there is evidence of
discrimination against women in areas for the labour market such as hiring/firing and
promotion”10. Clark (1997) explains this result in term of jobs, work values, self-
selection and expectations by assuming that workers who expect comparatively less of
10 Ward and Sloane (1999), p.1
15
their job report higher job satisfaction, compared to those who expect more in the terms
of career opportunities and the career status that one is aspiring to. Thus, women who
generally expect less from their job, due to their heavy involvement in home production,
feel more satisfied than men, since the satisfaction gap between the current state of job
career and what is expected to be reached is narrower (Kaiser, 2002). Sloane and
Williams (2000) also argued that the persistence of occupational segregation by gender is
a result of differing tastes for work between the sexes. Usually, men seek jobs in which
pecuniary factors such as overtime hours are emphasised and women prefer jobs with
flexible hours and other non-pecuniary aspects dominate. The above literature implies
that job satisfaction for female employees is determined by a different set of
characteristics than that of their male counterparts. The purpose of the following section
is to highlight whether there are male –female differences in terms of the job security –
job satisfaction relationship after taking the effects of endogeneity into account.
The Logit model: Job security and Gender
Table 1 column 3 and 5 repots the results of this study on the job security regression
separately for men and women employees.
Burchell (1999) and Brown Johnson et al (1992) have found that men suffer more than
women when they are faced with high likelihood to loose their job. Campbell et al (2001)
found that women working in the private sector are more insecure concerning the
retention of their current job compared to their public sector counterparts, but these
differences are not significant for men. This study shows that for married women the
odds of reporting a higher level of job security are 1.28 times greater compared to single
women, whereas for men this effect is not statistically significant. Both men and women
employed in the private sector do not appear to have statistically significant differences
regarding their perceived job security compared to public sector employees.
Bender and Sloane (1999) have shown that job security increases with the job tenure as
long tenure employees gain job rights such as favourable treatment in relation to possible
16
redundancy, the so called a First-In, First-Out principle. Also, Green et al (2000) found
that the relationship between job insecurity and tenure is U-shaped. The present study
implies similar effects for both genders. Job security increases with the experience in the
job and individuals whose job has lasted for more than 3 years also report lower
likelihood of losing their job. In addition, workers who report that they utilise their skills
in performing the job tasks feel that their job is more secure in terms of retention
compared to the remainder.
Bender and Sloane (1999) found that the effect of union membership on job security is
only significant for manual males. This finding is confirmed by the results of this study
since men who are members of a union feel more secure in terms of the likelihood of
losing their jobs. The odds of a union member of reporting greater job security are 1.24
times greater than the non-union employees. In contrast, for women there is no similar
significant effect. Finally, women appear to enjoy higher job security compared to men in
Spain and Greece. For Netherlands, male workers feel more secure with their jobs than
female workers. Finally, men in France are more worried about the job security compared
to their female counterparts.
Job Satisfaction and Gender
Table 1, column 4 and 6, presents the job satisfaction results separately for men and
women employees. In general, one can say that the determinants of job satisfaction do not
differ substantially between genders. Table 2 reports a t-test indicating significant
differences between the coefficients of the job satisfaction regressions for the male and
female sample. As it can be seen the differences of the coefficients on male – female
predicted job security is statistically insignificant. Therefore, job security is a significant
determinant of job satisfaction for both man and women even after controlling for
endogeneity. Thus, uncertainty concerning the job retention has detrimental effect on the
utility derived from work for both genders. If happy workers are also the productive
workers, then uncertainty about the job security has also detrimental effects on labour
productivity for both genders. In addition, whether one utilizes his or her skills in
17
performing the job has comparable effects on the job satisfaction for both men and
women.
The effect of age on job satisfaction is significant for males but not for the females11 but
the coefficients are of similar size, thus in line with Clark (1997) who showed that age
has comparable effects on the job satisfaction for men and women. Being married or
cohabiting has a positive effect on the job satisfaction for women but not for men. The
odds of reporting higher job satisfaction for married women are 1.34 compared to the non
married ones.
This study suggests that there may be a significant effect of occupational status on the job
satisfaction for men, while managers and professionals are the most satisfied. Moguerou
(2002) finds that females in the academic sector are as less satisfied with their job than
males, other things being equal. This is contrary to the findings of Lydon and Chevalier
(2002), who report that for highly educated individuals, women are more satisfied than
men. This study shows that there is a positive and significant effect of higher education
on the job satisfaction for men only but no significant differences in the size of the
coefficients for the male and female regressions were found. Union membership is
significantly correlated with lower job satisfaction, in line with the “exit voice” view, but
only for men. Yet, for all the above variables the t-tests indicate no significant statistical
differences in the size of the coefficients between the regression results for the
regressions for males and females.
The size of the firm by which the worker is employed affects the job satisfaction of
women but not of men. However, contrary to Sloane and Williams (2000) who report that
women employed in the largest establishments report higher job satisfaction than men,
this study shows that women working in small firms exhibit not only higher odds of
reporting higher level of job satisfaction compared to women working in bigger firms but
also that they are more satisfied with their jobs compared to men who also work in small
11 At 10% significance.
18
firms. Finally, for the seven European countries considered in this study, no significant
gender differences on job satisfaction between countries were found.
6. CONCLUSIONS
The ordered logistic approach adopted in this paper focuses on the effect of job security
on job satisfaction. The results show that, after controlling for endogeneity, the effect of
job security on job satisfaction is significant for both genders for all seven EU countries
considered. Uncertainty concerning the job security has detrimental effect on job
satisfaction. Since there is evidence that workers who exhibit high job satisfaction are
also productive in their job tasks then high uncertainty about the future job security
should be expected to also have detrimental effects on the productivity of both male and
female workers.
In line with earlier studies, this study shows that the level of job security reported by
workers is related to various job and personal characteristics. Job security is greater for
those who use their skills during the performance of their job tasks and for those who are
employed in the public sector. Job security is higher among older workers, married
individuals and especially married women. Long job tenure is an important determinant
of greater job security as this shows long-term employer-employee relationship and a
good job-match. Finally, trade union membership tends to decrease job insecurity.
Workers who believe that there is not high likelihood to lose their job exhibit higher job
satisfaction than the remainder and this effect becomes even more pronounced when the
endogeneity in the job security – job satisfaction relationship is taken into account.
This study raises doubts on the social and economic desirability of human resource
management measures solely favoring labour market efficiency via labour market
flexibility. A more appropriate balance between labour market flexibility and job security
for the incumbent workforce may be more fruitful in enhancing a well functioning labour
market and labour productivity. Policy makers and human resource managers may need
19
to take into account the negative effects of job insecurity on workers’ job satisfaction and
the associated detrimental effects on the labour productivity of dissatisfied workers.
20
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25
Table 1: Ordered Logistic Regressions: Job satisfaction: Effects of Gender (Endogeneity Correction)
Job Security Job Satisfaction Job Security Job Satisfaction Job Security Job Satisfaction
All Men Women
1 2 3 4 5 6
Independent variables
Dependent variables exp(coef) exp(coef) exp(coef) exp(coef) exp(coef) exp(coef)
Predicted job security - 5.804*** - 3.92** - 2.88*
Male .932 .882*** - - -
Age 1.055*** .939*** 1.047* .923*** 1.062** .968
Agesquare .999* 1.000*** .999 1.00*** .999 1.00
Education 16-19 years .954 1.341*** .96 1.36*** .970 1.30**
Education 20 plus .908 1.285*** .887 1.37*** .929 1.17
Married 1.211*** 1.187*** 1.13 1.108 1.288*** 1.34***
Managers & Professionals 1.085 1.20** 1.041 1.24** 1.15 1.20
Skilled .937 1.17** .978 1.146* .897 1.16
Clerks & service and sales workers .935 1.117* 1.012 1.055 .870 1.08
Use of skills and experience in job 1.368*** 2.052*** 1.29*** 2.27*** 1.46*** 2.09***
Number of empl: 1 to 24 people .968 1.215*** .876* 1.10 1.09 1.41***
Member of Trade Union 1.198*** .871** 1.246*** .859** 1.14 .926
Working in the private sector .681*** 1.123* .606*** 1.12* .77*** 1.07
Residual
€
s
ε
1.366*** - 1.52*** - 1.17** -
Residual
€
t
ε
1.047 - 1.05 - 1.04 -
Residual
€
p
ε
1.389*** - 1.40*** - 1.38** -
A job lasting longer than 3 years 2.24*** .949 2.23*** 1.26* 2.29*** .874
Denmark .960 1.949*** .983 2.12*** .968 1.75***
Finland .893 1.464*** .840 1.55*** .992 1.39**
Netherland 1.424*** 1.815*** 1.52*** 1.63*** 1.35* 2.12***
France .924 .705*** .790* .72*** 1.13 .723**
Spain 1.29** .772** 1.10 .86 1.64*** .820
Greece 2.001*** .540*** 1.48** .61*** 3.12*** .688**
Number of obs 6326 3441 2885
LR chi2 558.39 604.09 338.71 376.68 253.29 255.45
Log pseudo-likelihood -4067.50 -10250.031 -2193.73 -5528.08 -1856.93 -4698.50
Note *, **, *** indicate significant improvement in the log-likelihood at 10, 5, 1 percent levels, respectively.
26
Table 2: t-Statistics Testing for the Gender Differences
Job Satisfaction
Independent variables
Dependent
variables t-test
Predicted job security 0.34
Age 1.61
Education 16-19 years 0.32
Education 20 plus 1.00
Married 1.90
Managers & Professionals 0.21
Skilled (technicians, craft and related trades workers) 0.12
Clerks & service and sales workers 0.03
Use of skills and experience in the job 0.74
Number of employees: 1 to 24 people 2.51
Member of Trade union 0.67
Working in the private sector 0.33
A job lasting longer than 3 years 1.95
Denmark 1.06
Finland 0.60
Netherland 1.37
France 0.02
Spain 0.24
Greece 1.41
27
Figure 1: Job satisfaction and likelihood to loose job in 12 months
21,95
17,89
18,7
32,52
22,44
16,54
27,17
22,05
12,02
22,65
27,66
23,05
7,94
14,05
35,79
31,75
4,88
9,53
35,29
41,98
3,66
4,97
29,91
56,07
3,41
3,41
23,23
63,03
0%
20%
40%
60%
80%
100%
1234567
Job Satisfaction
Job satisfaction and likelihood to leave job in 12
months
Very Likely Quite Likely not very likely not at all likely
Source: Eurobarometer 44.3-1996
28
Appendix Table 1: Variable List
Variables Definition
Job satisfaction Standardized score of an individuals’ job satisfaction where is measure on
a seven point scale of 1=not at all satisfied to 7=very satisfied
Losej_not Likelihood to leave job in 12 months |-Not at all likely
Predicted job security Predicted value estimated from the job security regression
Male Dummy variable equal to 1 if the respondent is a male
Age Age of the respondent in years (18 to 65)
Married Dummy variable equal to 1 if the respondent is married
Education 15 Dummy variable –Formal education continued up to 15 years of age
Education 16-19 years Dummy variable- Formal education continued up to 16-19 years of age
Education 20 plus Dummy variable - Formal education continued until 20 plus years of age
Managers & Professionals Dummy variable- Managers & Professionals
Skilled Dummy variable- Technicians, craft and related trades workers
Clerks Dummy variable-Clerks & service and sales workers
Farmer Dummy variable-Agricultural and Fishery, Workers Plant and machine
operators Elementary occupations
Use of skills and
experience in job Dummy variable equal to 1 if the respondent use her skills and experience
in the job
Number of employees: 1 to
24 people Dummy variable equal to 1 if the respondent work in a firm with number
of employees: 1 to 24 people
Member of Trade union Dummy variable equal to 1 if the respondent is in a trade union
Working in private sector Dummy variable equal to 1 if the respondent works in the private sector
€
s
ε
Residuals from the estimated regression
S
Y
€
t
ε
Residuals for the estimated regression
T
Y
€
p
ε
Residuals for the estimated regression
P
Y
A job lasting longer than 3
years Dummy variable equal to 1 if the respondent replies that his contract
duration according to his employer is longer than 3 years
Denmark Dummy variable equal to 1 if the respondent is from Denmark
Great Britain Dummy variable equal to 1 if the respondent is from Great Britain
Finland Dummy variable equal to 1 if the respondent is from Finland
Netherlands Dummy variable equal to 1 if the respondent is from Netherlands
France Dummy variable equal to 1 if the respondent is from France
Spain Dummy variable equal to 1 if the respondent is from Spain
Greece Dummy variable equal to 1 if the respondent is from Greece
29
Appendix Table 2: Sample descriptive statistics (%)
Variables All Men Women
Personal characteristics
Age (mean) 38.47 38.68 38.20
Gender 57.27 42.73
Married 57 58.86 41.14
Education
Education 15 19.83 59.01 40.99
Education 16-19 years 46.67 57.60 42.40
Education 20 plus 33.51 55.77 44.23
Occupations
Managers & Professionals 21.22 61.34 38.66
Skilled (technicians, craft and
related trades workers) 28.50 67.03 32.97
Clerks & service and sales workers 28.06 38.56 61.44
Agricultural and Fishery Workers
Plant and machine operators
Elementary occupations
21.29 63.16 36.84
Job Characteristics
Use of skills and experience in the
j
ob 77.62 58.72 41.28
N
umber of employees: 1 to 24
p
eople 59.30 55.72 44.28
Trade Union 37.66 59.42 40.58
Working in the private sector 62.75 61.79 38.21
A job lasting longer than 3 years 59.13 56.20 43.80
Likelihood to leave job in 12
months |-Not at all likely 45.65 57.78 42.22
Secure job is very important 61.28 57.78 42.22
Pay taxes for create more jobs 43.45 58.06 41.94
Live in parents house 14.53 62.69 37.31
Denmark 7.14 52.90 47.10
Finland 5.69 53.86 46.14
N
etherlands 6.16 55.46 44.54
France 7.89 57.70 42.30
Spain 5.85 59.96 40.04
Great Britain 8.30 54.45 45.55
Greece 5.80 68.53 31.47
Valid N 6,326 3,441 2,885
30
Appendix Table 3: Ordered Logistic Regression: Job satisfaction (No Endogeneity
Correction)
Job satisfaction
Independent variables
Dependent variables All Men Women
exp(coef) exp(coef) exp(coef)
Likelihood to leave job in 12 months |-Not at all likely 2.51*** 2.51*** 2.539***
Male .871 *** -
Age .942 *** .923*** .965*
Age square 1.000*** 1.001*** 1.000**
Education 16-19 years 1.337*** 1.365*** 1.305***
Education 20 plus 1.252*** 1.359*** 1.114
Married 1.227 *** 1.117 1.317***
Managers & Professionals 1.229 *** 1.270** 1.167
Skilled (technicians, craft and related trades workers) 1.163 *** 1.151* 1.187
Clerks & service and sales workers 1.108 1.057 1.122
Use of skills and experience in the job 2.247 *** 2.398*** 2.125***
Number of employees: 1 to 24 people 1.226 *** 1.109 * 1.367***
Member of Trade union .900 ** .874** .955
Working in the private sector 1.033 1.069 .991
A job lasting longer than 3 years 1.125 ** 1.408*** .898
Denmark 1.92 *** 2.128*** 1.739***
Finland 1.43 *** 1.527*** 1.342**
Netherlands 1.961*** 1.703*** 2.258***
France .687 *** .706*** .663***
Spain .815 * .869 .765
Greece .631*** .651*** .617**
Number of obs. 6,326 3,441 2,885
LR chi2 967.01 572.10 426.93
Log pseudo-likelihood -10068.56 -5430.37 -4612.76
Note *, **, *** indicate significant improvement in the log-likelihood at 10, 5, 1 percent
levels, respectively.
31