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Explaining Pension Dynamics

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  • Rebecca A. Luzadis
  • Olivia S. Mitchell

Abstract

Whether and how the labor market will adapt to anticipated changes in the workforce age distribution depends on how able companies are to induce desired turnover patterns among older and younger employees. This paper contends that companies can and will use pension plan provisions as powerful incentives to induce people to remain on their jobs, and perhaps even more importantly to leave at later ages. A longitudinal file of collectively bargained pension plans gathered by the United States Bureau of Labor Statistics is examined empirically. We find dramatic increases in benefit levels, reductions in early, normal and deferred retirement ages, and declines in the age at which pension present values peak (with retirement after that age penalized). Several explanations for these observed pension outcomes are evaluated empirically. We believe that these findings indicate how employer-provided pensions can and will play an important role in helping companies induce desired turnover patterns as the workforce ages.

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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 26 (1991)
Issue (Month): 4 ()
Pages: 679-703

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Handle: RePEc:uwp:jhriss:v:26:y:1991:i:4:p:679-703

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Web page: http://jhr.uwpress.org/

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  1. repec:fth:stanho:e-88-28 is not listed on IDEAS
  2. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(6), pages 1261-84, December.
  3. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, Econometric Society, vol. 58(5), pages 1151-80, September.
  4. Zvi Bodie & John B. Shoven, 1983. "Financial Aspects of the United States Pension System," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number bodi83-1.
  5. Olivia S. Mitchell & Rebecca A. Luzadis, 1988. "Changes in pension incentives through time," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, ILR Review, Cornell University, ILR School, vol. 42(1), pages 100-108, October.
  6. Richard V. Burkhauser, 1979. "The Pension Acceptance Decision of Older Workers," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 14(1), pages 63-75.
  7. Olivia S. Mitchell & Emily S. Andrews, 1981. "Scale economies in private multi-employer pension systems," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, ILR Review, Cornell University, ILR School, vol. 34(4), pages 522-530, July.
  8. Steven G. Allen & Robert L. Clark & Daniel A. Sumner, 1984. "Post-Retirement Adjustments of Pension Benefits," NBER Working Papers 1364, National Bureau of Economic Research, Inc.
  9. Phillip B. Levine & Olivia S. Mitchell, 1988. "The Baby Boom's Legacy: Relative Wages in the 21st Century," NBER Working Papers 2501, National Bureau of Economic Research, Inc.
  10. Hutchens, Robert, 1986. "Delayed Payment Contracts and a Firm's Propensity to Hire Older Workers," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 4(4), pages 439-57, October.
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Cited by:
  1. Alan L. Gustman & F. Thomas Juster, 1995. "Income and Wealth of Older American Households: Modeling Issues for Public Policy Analysis," NBER Working Papers 4996, National Bureau of Economic Research, Inc.
  2. Alan L. Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, 1993. "The Role of Pensions in the Labor Market," NBER Working Papers 4295, National Bureau of Economic Research, Inc.
  3. Alan L. Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, 1994. "Retirement Research Using the Health and Retirement Survey," NBER Working Papers 4813, National Bureau of Economic Research, Inc.
  4. Samwick, Andrew A., 1998. "New evidence on pensions, social security, and the timing of retirement," Journal of Public Economics, Elsevier, Elsevier, vol. 70(2), pages 207-236, November.
  5. Olivia Mitchell, 1999. "New Trends in Pension Benefit and Retirement Provisions," NBER Working Papers 7381, National Bureau of Economic Research, Inc.
  6. Vittas, Dimitri, 1998. "Regulatory controversies of private pension funds," Policy Research Working Paper Series, The World Bank 1893, The World Bank.
  7. Garen, John & Berger, Mark & Scott, Frank, 1996. "Pensions, non-discrimination policies, and the employment of older workers," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 36(4), pages 417-429.
  8. Christopher J. Ruhm, 1994. "Do Pensions Increase the Labor Supply of Older Men?," NBER Working Papers 4925, National Bureau of Economic Research, Inc.
  9. Olivia S. Mitchell, 1993. "Retirement Systems in Developed and Developing Countries: Institutional Features, Economic Effects, and Lessons for Economies in Transition," NBER Working Papers 4424, National Bureau of Economic Research, Inc.
  10. Dan A. Black, 1996. "Family Health Benefits and Worker Turnover," Labor and Demography, EconWPA 9604001, EconWPA.
  11. Olivia S. Mitchell, . "Developments in Pensions," Pension Research Council Working Papers, Wharton School Pension Research Council, University of Pennsylvania 98-4, Wharton School Pension Research Council, University of Pennsylvania.

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