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Pensions, Bonding, and Lifetime Jobs

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  • Steven G. Allen
  • Robert L. Clark
  • Ann A. McDermed
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    Abstract

    A well-known, if underappreciated, finding in the mobility literature is that turnover is much lower in jobs covered by pensions than in other jobs. This could result from capital losses for job changes created by most benefit formulas, the tendency of turnover-prone individuals to avoid jobs covered by pensions, or higher overall compensation levels in such jobs. A switching bivariate probit model of pension coverage and turnover is developed to estimate the effect of each of these factors. The results show that capital losses are the main factor responsible for lower turnover in jobs covered by pensions, but self-selection and compensation levels also play an important role. This is the first direct evidence that bonding is important for understanding long-term employment relationships.

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    Bibliographic Info

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

    Volume (Year): 28 (1993)
    Issue (Month): 3 ()
    Pages: 463-481

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    Handle: RePEc:uwp:jhriss:v:28:y:1993:i:3:p:463-481

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

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    Cited by:
    1. Christian E. Weller, 2011. "What Does the Literature Tell Us About the Possible Effect of Changing Retirement Benefits on Public Employee Effectiveness?," Working Papers wp270, Political Economy Research Institute, University of Massachusetts at Amherst.
    2. Harris, Douglas N. & Adams, Scott J., 2007. "Understanding the level and causes of teacher turnover: A comparison with other professions," Economics of Education Review, Elsevier, vol. 26(3), pages 325-337, June.
    3. Bernheim, B. Douglas, 2002. "Taxation and saving," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 18, pages 1173-1249 Elsevier.
    4. Parrado, Eric & Caner, Asena & Wolff, Edward N., 2007. "Occupational and industrial mobility in the United States," Labour Economics, Elsevier, vol. 14(3), pages 435-455, June.
    5. Leora Friedberg & Michael Owyang, 2004. "Explaining the Evolution of Pension Structure and Job Tenure," NBER Working Papers 10714, National Bureau of Economic Research, Inc.
    6. David McCarthy, 2003. "A Lifecycle Analysis of Defined Benefit Pension Plans," Working Papers wp053, University of Michigan, Michigan Retirement Research Center.
    7. Eric M. Engen & William G. Gale & John Karl Scholz, 1996. "The Illusory Effects of Saving Incentives on Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 113-138, Fall.
    8. Gary V. Engelhardt, 2000. "Have 401(k)s Raised Household Saving? Evidence from the Health and Retirement Study," Social and Economic Dimensions of an Aging Population Research Papers 33, McMaster University.
    9. 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.
    10. repec:umc:wpaper:1310 is not listed on IDEAS
    11. Alicia H. Munnell & Kelly Haverstick & Geoffrey Sanzenbacher, 2006. "Job Tenure and Pension Coverage," Working Papers, Center for Retirement Research at Boston College wp2006-18, Center for Retirement Research, revised Oct 2006.
    12. Christopher J. Ruhm, 1994. "Do Pensions Increase the Labor Supply of Older Men?," NBER Working Papers 4925, National Bureau of Economic Research, Inc.
    13. Horiba, Yutaka & Yoshida, Kazuo, 2002. "Determinants of Japanese corporate pension coverage," Journal of Economics and Business, Elsevier, vol. 54(5), pages 537-555.
    14. 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, vol. 36(4), pages 417-429.
    15. Eric M. Engen & William G. Gale & John Karl Scholz, 1996. "The Effects of Tax-Based Saving Incentives On Saving and Wealth," NBER Working Papers 5759, National Bureau of Economic Research, Inc.

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