IDEAS home Printed from https://ideas.repec.org/a/bla/ecinqu/v52y2014i3p1173-1189.html
   My bibliography  Save this article

What Do Unions Do To Pension Performance?

Author

Listed:
  • WILLIAM E. EVEN
  • DAVID A. MACPHERSON

Abstract

type="main" xml:id="ecin12081-abs-0001"> Unions can have either positive or negative effects on risk-adjusted returns in pension plans. On the positive side, a union can improve monitoring of pension advisors and asset managers. On the negative side, the union may sacrifice returns by making investments that promote union goals. This paper discusses how the structure of the pension plan affects the union's ability and willingness to sacrifice returns to promote union goals. Using panel data on over 38,000 pension plans drawn from IRS Form 5500 filings between 1988 and 2008, we find the lowest performing plans are unionized multi-employer plans. Among defined contribution plans, the underperformance of multi-employer union plans disappears when the pension is controlled by individual participants. (JEL J32, J51)

Suggested Citation

  • William E. Even & David A. Macpherson, 2014. "What Do Unions Do To Pension Performance?," Economic Inquiry, Western Economic Association International, vol. 52(3), pages 1173-1189, July.
    • Handle: RePEc:bla:ecinqu:v:52:y:2014:i:3:p:1173-1189
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/ecin.2014.52.issue-3
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:pri:cepsud:182lee is not listed on IDEAS
    2. Lauren Cohen & Andrea Frazzini & Christopher Malloy, 2008. "The Small World of Investing: Board Connections and Mutual Fund Returns," Journal of Political Economy, University of Chicago Press, vol. 116(5), pages 951-979, October.
    3. David S. Lee & Alexandre Mas, 2012. "Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961--1999," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 333-378.
    4. David S. Lee & Alexandre Mas, 2012. "Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961--1999," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 333-378.
    5. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    6. Barry T. Hirsch, 2004. "What Do Unions Do for Economic Performance?," Journal of Labor Research, Transaction Publishers, vol. 25(3), pages 415-456, July.
    7. Carhart, Mark M, 1997. "On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
    8. Ian Tonks, 2005. "Performance Persistence of Pension-Fund Managers," The Journal of Business, University of Chicago Press, vol. 78(5), pages 1917-1942, September.
    9. David S. Lee & Alexandre Mas, 2009. "Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961-1999," Working Papers 1117, Princeton University, Department of Economics, Industrial Relations Section..
    10. Ashwini K. Agrawal, 2012. "Corporate Governance Objectives of Labor Union Shareholders: Evidence from Proxy Voting," Review of Financial Studies, Society for Financial Studies, vol. 25(1), pages 187-226.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Blanchflower, David G., 2006. "A Cross-Country Study of Union Membership," IZA Discussion Papers 2016, Institute of Labor Economics (IZA).
    2. J. Adam Cobb, 2015. "Risky Business: The Decline of Defined Benefit Pensions and Firms’ Shifting of Risk," Organization Science, INFORMS, vol. 26(5), pages 1332-1350, October.
    3. Kim, Dongwoo & Koedel, Cory & Xiang, P. Brett, 2021. "The trade-off between pension costs and salary expenditures in the public sector," Journal of Pension Economics and Finance, Cambridge University Press, vol. 20(1), pages 151-168, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aaron J. Sojourner, 2013. "Do Unions Promote Members' Electoral Office Holding? Evidence from Correlates of State Legislatures' Occupational Shares," ILR Review, Cornell University, ILR School, vol. 66(2), pages 467-486, April.
    2. Aaron J. Sojourner & Brigham R. Frandsen & Robert J. Town & David C. Grabowski & Min M. Chen, 2015. "Impacts of Unionization on Quality and Productivity," ILR Review, Cornell University, ILR School, vol. 68(4), pages 771-806, August.
    3. Christian Nsiah & Chen Wu & Walter Mayer, 2012. "An analysis of US State’s export performance in the Asian Market," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(2), pages 533-550, October.
    4. MacLeod, W. Bentley, 2011. "Great Expectations: Law, Employment Contracts, and Labor Market Performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 18, pages 1591-1696, Elsevier.
    5. Isa Camyar & Bahar Ulupinar, 2019. "Electoral systems and the economy: a firm-level analysis," Constitutional Political Economy, Springer, vol. 30(1), pages 1-30, March.
    6. Ljungqvist, Alexander & Persson, Lars & Tåg, Joacim, 2016. "The Incredible Shrinking Stock Market: On the Political Economy Consequences of Excessive Delistings," Working Paper Series 1115, Research Institute of Industrial Economics, revised 06 Feb 2018.
    7. Alexander Ljungqvist & Lars Persson & Joacim Tåg, 2016. "Private Equity's Unintended Dark Side: On the Economic Consequences of Excessive Delistings," NBER Working Papers 21909, National Bureau of Economic Research, Inc.
    8. Vicente Cuñat & Mireia Giné & Maria Guadalupe, 2016. "Say Pays! Shareholder Voice and Firm Performance," Review of Finance, European Finance Association, vol. 20(5), pages 1799-1834.
    9. Chantziaras, Antonios & Dedoulis, Emmanouil & Leventis, Stergios, 2020. "The impact of labor unionization on monitoring costs," European Management Journal, Elsevier, vol. 38(2), pages 288-307.
    10. Yundan Guo & Li Shen, 2023. "Commercial Retirement FOFs in China: Investment and Persistence Performance Analysis," Sustainability, MDPI, vol. 15(18), pages 1-22, September.
    11. Dalia Marciukaityte, 2015. "Right-to-Work Laws and Financial Leverage," Financial Management, Financial Management Association International, vol. 44(1), pages 147-175, March.
    12. Caroline Flammer & Michael W. Toffel & Kala Viswanathan, 2021. "Shareholder activism and firms' voluntary disclosure of climate change risks," Strategic Management Journal, Wiley Blackwell, vol. 42(10), pages 1850-1879, October.
    13. Cici, Gjergji & Gehde-Trapp, Monika & Göricke, Marc-André & Kempf, Alexander, 2014. "What they did in their previous life: The investment value of mutual fund managers' experience outside the financial sector," CFR Working Papers 14-11, University of Cologne, Centre for Financial Research (CFR).
    14. Lauren Cohen & Andrea Frazzini & Christopher J. Malloy, 2012. "Hiring Cheerleaders: Board Appointments of "Independent" Directors," Management Science, INFORMS, vol. 58(6), pages 1039-1058, June.
    15. Blake, David & Caulfield, Tristan & Ioannidis, Christos & Tonks, Ian, 2014. "Improved inference in the evaluation of mutual fund performance using panel bootstrap methods," Journal of Econometrics, Elsevier, vol. 183(2), pages 202-210.
    16. Cuthbertson, Keith & Nitzsche, Dirk & O'Sullivan, Niall, 2016. "A review of behavioural and management effects in mutual fund performance," International Review of Financial Analysis, Elsevier, vol. 44(C), pages 162-176.
    17. Li, Xing & Hou, Keqiang, 2023. "Over-weighting risk factor augmented with mutual fund managers' social networks," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).
    18. Dasgupta, Amil & Fos, Vyacheslav & Sautner, Zacharias, 2021. "Institutional investors and corporate governance," LSE Research Online Documents on Economics 112114, London School of Economics and Political Science, LSE Library.
    19. Sean Cleary & Ashrafee Hossain, 2020. "POSTCRISIS M&As AND THE IMPACT OF FINANCIAL CONSTRAINTS," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 43(2), pages 407-454, May.
    20. Johan Stennek, 2020. "Why Unions Reduce Wage Inequality: A Theory of Domino Effects," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(3), pages 1045-1072, July.

    More about this item

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecinqu:v:52:y:2014:i:3:p:1173-1189. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.