The magic of the new: How job changes affect job satisfaction

• Published date: 01 March 2018
• Date: 01 March 2018
• DOI: http://doi.org/10.1111/jems.12217

Received: 14 December 2015 Revised: 15 April 2017 Accepted: 2 July 2017

DOI: 10.1111/jems.12217

ORIGINAL ARTICLE

The magic of the new: How job changes affect job satisfaction

Adrian Chadi1Clemens Hetschko2

1Institute forLabour Law and Industrial Rela-

tions in the European Union (IAAEU), Univer-

sität Trier, Behringstraße 21, D-54296 Trier,

Germany (Email: Chadi@iaaeu.de)

2School of Business and Economics,

Freie Universität Berlin,Boltz-

mannstraße 20, D-14195 Berlin, Germany

(Email: Clemens.Hetschko@fu-berlin.de)

Abstract

We investigate a crucial event for job satisfaction: changingone’s workplace. For rep-

resentative German panel data, we show that the reason why the previous employment

ended is strongly linked to satisfaction with the new job. Workers initiating a change

of employer experience extraordinarily high job satisfaction, though in the short term

only. To investigate causality, we exploit the event of plant closure as an exogenous

trigger of job switching. In this case, we find no significantly positive effect of job

changes on job satisfaction.Our findings complement research on workers’well-being

and concern labor market policies and human resource management.

Your heart must always be ready to leave,

and ready to begin again,

must form new bonds

with courage and without regret.

Every beginning offers a magic power

that protects us and helps us to endure.1

1CHANGES AND JOB SATISFACTION

In Stages, one of his most famous and probably most frequently cited poems, Hermann Hesse describes each end of a stage

in life as part of a new beginning. The statement “every beginning offers a magic power” is expressive of the hope that each

farewell, however sad it may be, will yield a promising start. The present study analyzes job changes as a transition from one

stage to another. A large body of research documents that distress and sorrow often accompany the ending of an employment

relationship, with satisfaction with a job decreasing substantially before workers switchtheir workplace.2We, in contrast, focus

on the fresh start by analyzing how job changes affect job satisfaction after having moved to a new place of work.

Several reasons increasingly motivate labor economists to study occupational mobility. Even though the financial returns to

tenure are still considerable, studies suggest that workersswitch jobs more and more frequently, at least in some countries like the

United States and France (Kambourov & Manovskii, 2008; Lalé, 2012). Moreover, trends in occupational mobility are closely

related to trends in wage inequality, which themselves receive attention from labor researchers (Kambourov & Manovskii,

2009). In a recent study, Groes, Kircher, and Manovskii (2015) focus on the drivers of occupational mobility and document

that workers at the lower and at the higher end of a firm’s wage distribution tend to switch jobs particularly often. To allow

The authors are very grateful for helpful comments by a coeditor and two anonymousreviewers. In addition, we thank Vanessa Dräger, Laszlo Goerke, Markus

Janser, Patrick Kampkötter, Sacha Kapoor, Vanessa Mertins, Susanne Steffes, the participants of the annual meetings of the European Economic Association

(Toulouse 2014), the German Economic Association (Hamburg 2014), the Austrian Economic Association (Vienna 2014), the Scottish Economic Society

(Perth 2014), the European Society for Population Economics (Braga 2014), and the European Association of Labour Economists (Ljubljana 2014). We are

also grateful to the participants of the Human Resource Management Workshop (Mannheim 2013), the Workshop inEconomics (Trier 2013), t he NewFirms

and the Quality of Work Workshop(Tübingen 2014), the Spring Meeting of Young Economists (Vienna 2014), and the Colloquium on Personnel Economics

(Cologne 2014).

J Econ Manage Strat. 2018;27:23–39. © 2017 WileyPeriodicals, Inc. 23wileyonlinelibrary.com/journal/jems

24 JOURNAL OF ECONOMICS & MANAGEMENTSTRATEGY

for a broader picture on the implications of changing labor markets, economists increasingly make use of subjective data to

inform both research and policymakers. In this context, job satisfaction is regarded as a measure of worker’s well-being (e.g.,

Frey, 2008; Helliwell & Barrington-Leigh, 2010; Weimann, Knabe, & Schöb, 2015). Besides the utility derived from earnings,

management research shows that job satisfaction covers the welfare people obtain from a variety of aspects related to their

work, such as fulfillment, task characteristics, personal growth, promotion opportunities, managerial quality, organizational

support, and social relations at work (see Spector, 1997 and Fisher, 2010 for reviews). Although there is an overlap of different

disciplines interested in similar research questions at this point, labor economists in particular refer to the work by managerial

researchers and applied psychologists on job satisfaction as a predictor of employees’ choices, such as absence behavior (e.g.,

Diestel, Wegge, & Schmidt, 2014; Wegge, Schmidt, Parkes, & van Dick, 2007). Meta-analyses summarize a large amount of

evidence documenting that job satisfaction correlates positively with employee performance (Iaffaldano & Muchinsky, 1985;

Judge, Thoresen, Bono, & Patton, 2001; Petty, McGee, & Cavender, 1984), negatively with employee turnover (Griffeth, Hom,

& Gaertner, 2000), and positively with aggregate productivity at the business-unit level (Harter, Schmidt, & Hayes, 2002).3

As a result, job satisfaction is considered to be important for understanding how job search activities translate into actual quits

(Swider, Boswell, & Zimmerman, 2011) and allowsfir ms to fostereconomically relevant outcomes, such as successful newcomer

adjustment (Bauer, Bodner, Erdogan, Truxillo, & Tucker, 2007).

Despite this impressively large interdisciplinary body of studies, there is a remarkable lack of researchon how job satisfaction

is affected by job changes. Though Freeman (1978) already suggests in an early contribution that job satisfaction might play a

double role for job mobility, as predictor and outcome, the second role has drawn much less attention than the first. The case

study of Boswell, Boudreau, and Tichy(2005) analyzes the relationship of job changes and job satisfaction for U.S. managers and

reveals a pattern that the authors term the “honeymoon-hangover effect.” In line with the literature on voluntary quits, subjects

express dissatisfaction with their work prior to job switching. The rather novel finding is the extraordinary peak in satisfaction

levels that managers report in their new job as well as the fact that this “magic of the new” quickly disappears. Boswell, Shipp,

Payne, and Culbertson (2009) obtain similar findings when interviewing a number of newcomers to a public sector service

organization. These results raise the question of whether the honeymoon-hangover pattern describes job changes in general or

whether it only holds for job switching in rather selective samples. Some studiesdo indeed document changes in job satisfaction

similar to the honeymoon-hangover pattern, while they focus primarily on other research issues (e.g., Georgellis & Tabvuma,

2010; Gielen, 2013; Grund, 2001; Johnston & Lee, 2012, 2013). In their broad investigation of the relationship between job

changes and job satisfaction,Akerlof, Rose, and Yellen (1988) also present some representative evidence on workers’satisfaction

after the job change. As their main aim is to analyze job switching as a consequence of dissatisfaction among workers, we

conclude from our review of the literature that a comprehensive discussion of job satisfaction in the new job is still lacking.

To fill this gap, we employ large-scale German panel data to document the honeymoon-hangover effect accompanying job

changes in a representative sample of employees. Using information on various life circumstances, parallel life events, job

characteristics, and comparisons of initial and new job, we investigate the robustness of the pattern and its potential drivers.

Most importantly, we shed light on the question whether switching jobs itself affects job satisfaction, for instance, because

newcomers’ motivation, performance, and, in consequence, rewards are generally above-average. By distinguishing between

endogenously and exogenously triggered job changes, we can answer the question of whether every parting is indeed followed

by a promising start. To make this distinction independent of the complex issue of mobility within firms, we focus on changes

of employers.4Similar to research on entries into unemployment (Kassenboehmer & Haisken-DeNew, 2009), we use German

Socio-Economic Panel (SOEP) data (Wagner, Frick, & Schupp, 2007) to distinguish betweenfour reasons for job changes from

the employee’spoint of view: quit, mutual agreement about employment termination, dismissal, and plant closure. The last event

is of special importance as only an exogenous trigger helps us to investigate how switching jobs itself affects job satisfaction.

We analyze and consider selection issues in this respect by individual fixed-effects estimationsas well as a matching approach,

exploiting the richness of our data set.

We proceed as follows: The next section describes our database and methodology. We present our main results in Section 3.

Section 4 documents various sensitivity analyses, and Section 5 concludes.

2FRAMEWORK

2.1 Data

We use data from the German SOEP study, for which the same persons are interviewed year after year. This survey enables us

to take a dynamic perspective on job mobility and includes multifaceted information about job characteristics as well as other