Does Job-Satisfaction Cause Life-Satisfaction? New Evidence Using Lewbel Methodology

Zahra Batool, Hamid Hasan, Ghulam Mustafa Sajid


While studies on the direction of causality between job
satisfaction and life satisfaction are abundant, their evidence is still
inconclusive primarily because of the difficulty in finding suitable
external instruments. We have constructed internal instruments, using
the Lewbel methodology, which satisfy the desirable properties. It is
important to determine the direction of causality since the implications
for public and labour policies are different depending on the direction.
The second contribution of this study is to examine the link between
life satisfaction and the twelve aspects of job satisfaction in order to
explore whether extrinsic (pay, benefits, and other work conditions) or
intrinsic (kind of work) job satisfaction matters. For this purpose, a
survey was conducted in Wah Cantt, Pakistan using a sample of 300
respondents. The study findings reveal that there is a bidirectional
causality between life and job satisfaction. However, the effect of job
satisfaction on life satisfaction is stronger than the effect of life
satisfaction on job satisfaction. Mixed results related to causality
between twelve aspects of job satisfaction and life satisfaction were
found. The paper ends with important policy implications. Keywords: Life
Satisfaction; Job Satisfaction; Aspects of Job Satisfaction;

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