A Study on Worker’s Perceptions of Psychological Capital on their Earnings

Introduction

Economists have shown a deep interest in the determinants of worker’s earnings. The marginal productivity theory of wages suggests that, other characteristics held constant, the wage rate is determined by the worker’s marginal productivity. The human capital theory states that factors such as education, experience and job training improve the worker’s human capital endowments and thus enhances worker’s productivity leading to higher earnings (Becker, 1964; Mincer, 1962, 1974). The other school of thought believes that worker’s personality, attitude and a host of other constructs that reflect psychological capital such as self-esteem, motivation, conscientiousness and positive attitude to life and work are important determinants of worker’s earnings. For example, Nollen and Gaertner (1991) demonstrated that it is the performance (productivity) of the worker and not necessarily the training (human capital endowment) that determined his/her earnings. According to these researchers, education and training affect earnings positively only through their positive effects on performance. In other words, any variable that has positive effects on productivity is likely to increase earnings (Barrick & Mount, 1991; Nyhus & Pons, 2005; Salgado, 1997). Further, it is argued that psychological capital possesses incentive enhancing property and augments productivity, leading to higher earnings (Bowles, Gintis, & Osborne, 2001). Thus, it is believed that in addition to human capital, psychological capital also plays an important role in determining the wage the worker receives.

Despite the importance of psychological capital in the determination of the worker’s wages, it has not been used frequently as a standard explanatory variable by researchers estimating wage equations. This may be due to several reasons. First, the information on the psychological variable is not available in the most widely used economic data sets. The few data sets that do include this variable report it only for a few selected years, and consequently, researchers using other data sets may not have the opportunity to include this variable in their regression models. Second, most traditional economists believe that psychological variables are not accurately measurable and consequently, any such variable available in a data set may not be reliable (Goldsmith, Veum, & Darity, 1997). Finally, it has been generally accepted that other factors remaining constant, a worker with a good attitude is likely to be more productive. This relationship therefore may have been conceived by past researchers as too trivial to test in a formal manner. Such an omission, however, is problematic for several reasons. Given these caveats in quantitative techniques, this study explores workers’ perceptions of the influence of psychological capital on their earnings and job performance using a qualitative approach.

The purpose of this study is to explore potential connections to earnings of the perceptions of a select sample based on their lived experiences and psychological capital attributes among workers of various occupations in New York City. At this stage in the research, given the nature of this study, the term psychological capital will be defined in a much broader sense and hence includes psychological aspects such as a person’s perception of self, one’s attitude towards work, one’s ethical orientation and one’s general outlook on life. The research questions particularly explore participants’ perceptions of the influence of psychological capital on earnings. Since, in a qualitative study, the focus is not in proving or showing a causal relationship, the questions revolve around participants’ perceptions or experiences of psychological capital and how this construct affected their past, present and future earnings.