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Searching For Better Prospects: Endogenizing Falling Job Tenure and Private Pension Coverage

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  • Friedberg Leora

    ()
    (University of Virginia)

  • Owyang Michael T

    ()
    (Federal Reserve Bank of Saint Louis)

  • Sinclair Tara M

    ()
    (George Washington University)

Abstract

Recent declines in job tenure have coincided with a shift away from traditional defined benefit (DB) pensions, which reward long tenure. New evidence also points to an increase in job-to-job movements by workers, and we document gains in relative wages of job-to-job movers over a similar period. We develop a search model in which firms may offer tenure-based contracts like DB pensions to reduce the incidence of costly on-the-job search by workers. Either reduced search costs or an increase in the probability of job matches can, under fairly general conditions, lower the value of deterring search and the use of DB pensions.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 6 (2006)
Issue (Month): 1 (August)
Pages: 1-42

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Handle: RePEc:bpj:bejeap:v:topics.6:y:2006:i:1:n:14

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Cited by:
  1. Joshua Rauh & Irina Stefanescu & Stephen Zeldes, 2013. "Cost shifting and the freezing of corporate pension plans," Finance and Economics Discussion Series 2013-82, Board of Governors of the Federal Reserve System (U.S.).
  2. Ashok Thomas & Luca Spataro, 2013. "Pension funds and Market Efficiency: A review," Discussion Papers 2013/164, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  3. Leora Friedberg & Michael Owyang, 2004. "Explaining the Evolution of Pension Structure and Job Tenure," NBER Working Papers 10714, National Bureau of Economic Research, Inc.

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