Using data from the BHPS, we estimate the impact of occupational pensions on wages and on the tenure profile of wages of male private sector workers in the UK. According to the theoretical literature, occupational pensions participants should receive a premium at the beginning of their careers, when the financial quit disincentives stemming from defined benefit plans are less binding. Our empirical evidence is consistent with this prediction. We find that occupational pension participants earn a positive wage premium only at the beginning of the career. Once we account for the endogenous sorting of individuals into occupational pension schemes, the magnitude of the estimated premium decreases sharply and it looses statistical significance. Indeed, the wage premium appears to be completely explained by unobservable individual and job match heterogeneity.
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Paper provided by Universidad Carlos III, Departamento de EconomÃa in its series Economics Working Papers with number
we043612.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Montgomery, Edward & Shaw, Kathryn & Benedict, Mary Ellen, 1992.
"Pensions and Wages: An Hedonic Price Theory Approach,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(1), pages 111-28, February.
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