Wage reference groups and their determinants: A study of blue‐collar and white‐collar employees in Israel

This paper reports the results of a study on the comparative frames of reference concerning wages among white‐collar and blue‐collar industrial employees in Israel. The study had two major objectives. First, it examined the frames of reference used by employees in comparing their pay with others. In particular, we wanted to see whether comparisons were made mainly with others inside the employing organization or outside it, and whether the comparators were similar or dissimilar in status and occupation. A second objective was to test a number of hypotheses, derived from reference group theory, concerning the determinants of pay comparisons and involving the following variables: intra‐generational occupational mobility, perceived mobility opportunities, friendship ties in the organization, perceived promotion prospects, job satisfaction and perceived pay position relative to others in the same occupation.