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Evaluating Pension Portability Reforms: The Tax Reform Act of 1986 as a Natural Experiment

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  • Vincenzo Andrietti
  • Vincent A. Hildebrand

Abstract

This paper uses the Tax Reform Act of 1986 as a natural experiment to evaluate the job mobility response of prime-aged US employees participating in employer sponsored defined benefit pension plans to a reduction in the vesting period for pension rights accrual. We apply difference-in-differences methods using data from the Survey of Income and Program Participation to estimate the treatment impact of this policy change. We find that on average the reform had no significant effects on voluntary job mobility of the treated group. Our findings are robust to the use of different control groups and difference-in-differences estimators.

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Bibliographic Info

Paper provided by McMaster University in its series Social and Economic Dimensions of an Aging Population Research Papers with number 160.

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Length: 30 pages
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:mcm:sedapp:160

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Keywords: Labour mobility; employer-provided pension plans; vesting; program evaluation; propensity score matching;

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  1. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
  2. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," NBER Working Papers 6699, National Bureau of Economic Research, Inc.
  3. Vincenzo Andrietti & Vincent Hildebrand, 2001. "Pension Portability and Labour Mobility in the United States. New Evidence from the SIPP Data," CeRP Working Papers 10, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  4. Brigitte C. Madrian, 1993. "Employment-Based Health Insurance and Job Mobility: Is There Evidence ofJob-Lock?," NBER Working Papers 4476, National Bureau of Economic Research, Inc.
  5. Bruce D. Meyer, 1994. "Natural and Quasi- Experiments in Economics," NBER Technical Working Papers 0170, National Bureau of Economic Research, Inc.
  6. Steven G. Allen & Robert L. Clark & Ann A. McDermed, 1988. "Why Do Pensions Reduce Mobility?," NBER Working Papers 2509, National Bureau of Economic Research, Inc.
  7. Vincenzo Andrietti & Vincent Hildebrand, 2001. "Pension Portability and Labour Mobility in the United States. New Evidence from SIPP Data," Social and Economic Dimensions of an Aging Population Research Papers 42, McMaster University.
  8. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
  9. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
  10. Laurence J. Kotlikoff & David A. Wise, 1987. "Labor Compensation and the Structure of Private Pension Plans: Evidence for Contractual Versus Spot Labor Markets," NBER Working Papers 1290, National Bureau of Economic Research, Inc.
  11. Steven G. Allen & Robert L. Clark & Ann A. McDermed, 1991. "Pensions, Bonding, and Lifetime Jobs," NBER Working Papers 3688, National Bureau of Economic Research, Inc.
  12. Thomas C. Buchmueller & Robert G. Valletta, 1996. "The effects of employer-provided health insurance on worker mobility," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 49(3), pages 439-455, April.
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