Pay Justice and Pay Satisfaction: The Influence of Reciprocity, Social Comparisons, and Standard of Living

Abstract

This study compares two pay evaluations: pay justice and pay satisfaction. Conceptually, pay justice entails a moral assessment and is more specific to work, whereas pay satisfaction is a broader attitude that includes non-work-related factors. We analyzed German employee data and found overall similarity in determinants but differences in proximity to work contexts. Pay satisfaction was more strongly associated with private pay comparisons and standard of living, whereas pay justice was more strongly associated with reciprocity in the employer-employee relationship through working hours and comparisons at work. The results therefore suggest that employers can influence pay justice more easily than pay satisfaction by means of addressing imbalances in the employer-employee exchange and within organizational pay structures.