Time-in-Labour-Market and the Reference Group

This paper examines the relationship between the time spent in the labour market and the choice of the reference group for making relative income comparisons. The choice of reference group has been found in previous work to be an important determinant of various measures of well-being, including life-satisfaction, job-satisfaction, and satisfaction with pay. We estimate multinomial logit models of reference group determination using data from a survey of working conditions. The results suggest that a greater time spent in the labour market is associated with a higher probability of choosing local workers as the reference group for a sample of foreign “cross-border” workers. The results are consistent with studies of immigrant workers who are hypothesized to adjust their reference group over time