Does Risk Based Job Choice Matter for Job Satisfaction? Evidence from the German Reunification Experiment

Income risk preferences have been shown to be important for job choices, yet may be less important than other parameters for long term job satisfaction. The authors test for the long-term impact of risk-based job choice using a natural experiment: Pre-unification East Germans chose jobs in a socialist environment devoid of labour market income risk and variation, but were exposed post-unification to standard market risks. The authors find that job choices without income risk-preference matching lead to higher job satisfaction in the long run. Projection bias may explain why utility maximizing individuals apparently pay undue attention to income risk matching in job choice