The role of job satisfaction and local labor market conditions for the dissolution of worker-job matches

This paper scrutinizes the effect of job satisfaction on labor turnover. We use German SOEP data to estimate a multinomial logit model with random effects for the probability of a worker-job separation. In line with the previous literature, we find a negative relationship between job satisfaction and separations. We show that this relationship is entirely driven by less satisfied individuals, as the separation probability of more satisfied workers does not vary with job satisfaction. We also find that even among the most dissatisfied individuals, most workers remain in their current jobs. Finally, we show that the effect of job satisfaction varies with both local labor market conditions and the kind of separation under consideration (job-to-job or job-to-non-employment).