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Occupational Pensions and Job Mobility in the European Union

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  • Vincenzo Andrietti.
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    Abstract

    Although the issue of portability of occupational pension rights has been high on the European Union (EU) policy agenda in the last two decades, no comparative studies have been produced to support the policy debate with empirical evidence. Using data from the European Community Household Panel survey we estimate the role of occupational pensions on individual job mobility choices for a sample of EU Member States - Denmark, Ireland, the Netherlands and the United Kingdom - where occupational pensions play a major role in the provision of retirement income. We model individual job mobility choices as driven by ex-ante evaluation of the expected benefits and costs from mobility. The latters include potential pension portability losses arising to workers covered by defined benefit plans. Within a switching regression econometric framework we control for potential selection bias due to unobservables simultaneously a .ecting prospective wages and job mobility choices. This allows us to predict counterfactual (unobserved) wages for both movers and stayers and to identify the expected wage di .erential as well as the mobility cost parameters in a structural probit equation. We find that, among the countries under study, pension covered workers are significantly less likely to move only in the United Kingdom, while pension portability losses do not generally act as a significant impedment to labour mobility. Although these results are consistent with the pension portability options guaranteed by defined contribution plansin Denmark and by industry wide and company defined benefit plans in the Netherlands, they provide somewhat surprising evidence for the United Kingdom and particularly for Ireland, where defined benefit pensions tipically have limited portability. Rather, the finding of positive wage premiums accruing to pension covered workers in the latter two countries, particularly in Ireland, is consistent with the view that individuals are less likely to leave ”good” jobs.

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    Bibliographic Info

    Paper provided by European Economy Group in its series European Economy Group Working Papers with number 10.

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    Length: 48 pages
    Date of creation: 2001
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    Handle: RePEc:eeg:euroeg:10

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    Postal: Despacho 104.Pabelloon de Segundo, Facultad de Economicas. Universidad Complutense de Madrid. 28223 Pozuelo de Alarcon, Madrid
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    Cited by:
    1. David Greenaway & Neil Foster & Rod Falvey, 2002. "North-South Trade, Knowledge Spillovers and Growth," European Economy Group Working Papers 15, European Economy Group.
    2. Jaime Turrion & Carmela Martin, 2003. "Eastern Enlargement of the European Union and Foreign Direct Investment Adjustments," European Economy Group Working Papers 24, European Economy Group.
    3. Sourafel Girma, 2005. "Absorptive Capacity and Productivity Spillovers from FDI: A Threshold Regression Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(3), pages 281-306, 06.
    4. Jorge Crespo & Carmela Martin & Francisco Javier Velázquez, 2002. "International technology diffusion through imports and its impact on economic growth," European Economy Group Working Papers 12, European Economy Group.

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