Abstract
A number of recent studies used nominal pay in estimating the effects of individual differences, particularly core-self-evaluation, on career success. We show that this practice may lead to results that are substantively different from the results when the logarithm of pay is used. We conduct three constructive replications of previous studies, and argue that substantive conclusion based on the results of nominal pay are misleading.
Highlights
The interaction in the nominal pay model is the type of interaction that our analysis above suggests as more likely to be sensitive to what we called type I error, since it represents a case in which the influence of one antecedent on pay is stronger among those higher on the other antecedent than those lower on this antecedent
One aspect of the data that is apparent in this table is that the correlation of log pay with each of the determinants of pay was higher for log pay than for nominal pay, which is consistent with the argument that log pay should be preferred to pay as it supplies a better fit in pay models
We examine the interaction between Core Self Evaluations (CSE) and parental socioeconomic status and the interaction between CSE and educational attainment in the determination of pay
Summary
The decision whether to use equation 1 or equation 2 can be made based on statistical reasons, or based on theoretical reasons.
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