Advanced Search
MyIDEAS: Login to save this paper or follow this series

Explaining the Evolution of Pension Structure and Job Tenure

Contents:

Author Info

  • Leora Friedberg
  • Michael Owyang

Abstract

Current and expected job tenure have fallen significantly over the last two decades. Over the same period, traditional defined benefit pensions, designed to reward long tenure, have become steadily less common. This paper uses a contract-theoretic matching model with moral hazard to explain changes in pension structure and job tenure. In our model, a decline in the value of existing jobs relative to new jobs reduces expected match duration and thus the appeal of DB pensions. We show that this explanation is consistent with observed trends and suggests an additional consequence of technological change that has not been closely studied.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w10714.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10714.

as in new window
Length:
Date of creation: Aug 2004
Date of revision:
Handle: RePEc:nbr:nberwo:10714

Note: AG LS
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. Sewin Chan & Ann Huff Stevens, 2003. "What You Don't Know Can't Help You: Pension Knowledge and Retirement Decision Making," NBER Working Papers 10185, National Bureau of Economic Research, Inc.
  2. 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.
  3. Jagadeesh Gokhale & Erica L. Groshen & David Neumark, 1993. "Do Hostile Takeovers Reduce Extramarginal Wage Payments?," NBER Working Papers 4346, National Bureau of Economic Research, Inc.
  4. Ippolito, Richard A, 2001. "Reversion Taxes, Contingent Benefits, and the Decline in Pension Funding," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 44(1), pages 199-232, April.
  5. Bernhardt, Annette, et al, 1999. "Trends in Job Instability and Wages for Young Adult Men," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 17(4), pages S65-90, October.
  6. Leora Friedberg & Michael T. Owyang & Tara M. Sinclair, 2005. "Searching for Better Prospects: Endogenizing Falling Job Tenure and Private Pension Coverage," NBER Working Papers 11808, National Bureau of Economic Research, Inc.
  7. Olivia Mitchell, 1999. "New Trends in Pension Benefit and Retirement Provisions," NBER Working Papers 7381, National Bureau of Economic Research, Inc.
  8. den Haan, Wouter J. & Ramey, Garey & Watson, Joel, 2000. "Job destruction and the experiences of displaced workers," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 52(1), pages 87-128, June.
  9. Leslie E. Papke, 1996. "Are 401(k) Plans Replacing Other Employer-Provided Pensions? Evidence from Panel Data," NBER Working Papers 5736, National Bureau of Economic Research, Inc.
  10. Alan L. Gustman & Thomas L. Steinmeier, 1989. "The Stampede Toward Defined Contribution Pension Plans: Fact or Fiction?," NBER Working Papers 3086, National Bureau of Economic Research, Inc.
  11. Steven G. Allen & Robert L. Clark & Ann A. McDermed, 1993. "Pensions, Bonding, and Lifetime Jobs," Journal of Human Resources, University of Wisconsin Press, vol. 28(3), pages 463-481.
  12. Richard B. Freeman, 1985. "Unions, Pensions, and Union Pension Funds," NBER Chapters, National Bureau of Economic Research, Inc, in: Pensions, Labor, and Individual Choice, pages 89-122 National Bureau of Economic Research, Inc.
  13. Stephanie Aaronson & Julia Coronado, 2005. "Are firms or workers behind the shift away from DB pension plan?," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2005-17, Board of Governors of the Federal Reserve System (U.S.).
  14. Leora Freidberg & Michael T. Owyang, 2002. "Not your father's pension plan: the rise of 401K and other defined contribution plans," Review, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, issue Jan., pages 23-34.
  15. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 1999. "Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Papers 7136, National Bureau of Economic Research, Inc.
  16. Gottschalk, Peter & Moffitt, Robert, 1999. "Changes in Job Instability and Insecurity Using Monthly Survey Data," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 17(4), pages S91-126, October.
  17. Margaret Stevens, 2004. "Wage-Tenure Contracts in a Frictional Labour Market: Firms' Strategies for Recruitment and Retention," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 535-551.
  18. Francis X. Diebold & David Neumark & Daniel Polsky, 1994. "Job Stability in the United States," NBER Working Papers 4859, National Bureau of Economic Research, Inc.
  19. W. Kip Viscusi, 1985. "The Structure of Uncertainty and the Use of Nontransferable Pensions as a Mobility-Reduction Device," NBER Chapters, National Bureau of Economic Research, Inc, in: Pensions, Labor, and Individual Choice, pages 223-252 National Bureau of Economic Research, Inc.
  20. Richard A. Ippolito, 1991. "Encouraging long-term tenure: Wage tilt or pensions?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 44(3), pages 520-535, April.
  21. Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
  22. Farber, Henry S., 1999. "Mobility and stability: The dynamics of job change in labor markets," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 37, pages 2439-2483 Elsevier.
  23. Charles Brown, . "Early Retirement Windows," Pension Research Council Working Papers, Wharton School Pension Research Council, University of Pennsylvania 98-17, Wharton School Pension Research Council, University of Pennsylvania.
  24. Jeffrey Pontiff & Andrei Shleifer & Michael S. Weisbach, 1990. "Reversions of Excess Pension Assets after Takeovers," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 600-613, Winter.
  25. Alan L. Gustman & Thomas L. Steinmeier, 1999. "What People Don't Know About Their Pensions and Social Security: An Analysis Using Linked Data from the Health and Retirement Study," NBER Working Papers 7368, National Bureau of Economic Research, Inc.
  26. Steven G. Allen & Robert L. Clark & Ann A. McDermed, 1989. "The Pension Cost of Changing Jobs," NBER Working Papers 2935, National Bureau of Economic Research, Inc.
  27. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, University of Chicago Press, vol. 3(1), pages 1-18, January.
  28. Leora Friedberg & Anthony Webb, 2003. "Retirement and the Evolution of Pension Structure," NBER Working Papers 9999, National Bureau of Economic Research, Inc.
  29. Levy, Frank & Murnane, Richard J, 1996. "With What Skills Are Computers a Complement?," American Economic Review, American Economic Association, American Economic Association, vol. 86(2), pages 258-62, May.
  30. Leora Friedberg & Michael Owyang, 2004. "Explaining the Evolution of Pension Structure and Job Tenure," NBER Working Papers 10714, National Bureau of Economic Research, Inc.
  31. Ken Burdett & Melvyn Coles, 2003. "Equilibrium Wage-Tenure Contracts," Econometrica, Econometric Society, Econometric Society, vol. 71(5), pages 1377-1404, 09.
  32. Julia Lynn Coronado & Phillip C. Copeland, 2003. "Cash balance pension plan conversions and the new economy," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2003-63, Board of Governors of the Federal Reserve System (U.S.).
  33. Ann P. Bartel & Nachum Sicherman, 1999. "Technological Change and Wages: An Interindustry Analysis," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 107(2), pages 285-325, April.
  34. George A. Akerlof & Lawrence F. Katz, 1988. "Workers' Trust Funds and the Logic of Wage Profiles," NBER Working Papers 2548, National Bureau of Economic Research, Inc.
  35. Peter Gottschalk, 1997. "Inequality, Income Growth, and Mobility: The Basic Facts," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 11(2), pages 21-40, Spring.
  36. Jaeger, David A & Stevens, Ann Huff, 1999. "Is Job Stability in the United States Falling? Reconciling Trends in the Current Population Survey and Panel Study of Income Dynamics," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 17(4), pages S1-28, October.
  37. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1990. "Efficient Windows and Labor Force Reduction," NBER Working Papers 3369, National Bureau of Economic Research, Inc.
  38. Richard B. Freeman, 1980. "The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits," NBER Working Papers 0242, National Bureau of Economic Research, Inc.
  39. 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.
  40. William E. Even & David A. Macpherson, 1996. "Employer size and labor turnover: The role of pensions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 49(4), pages 707-728, July.
  41. Petersen, Mitchell A, 1992. "Pension Reversions and Worker-Stockholder Wealth Transfers," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(3), pages 1033-56, August.
  42. David H. Autor & Frank Levy & Richard J. Murnane, 2002. "Upstairs, downstairs: Computers and skills on two floors of a large bank," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(3), pages 432-447, April.
  43. Bloom, David E & Freeman, Richard B, 1992. "The Fall in Private Pension Coverage in the United States," American Economic Review, American Economic Association, American Economic Association, vol. 82(2), pages 539-45, May.
  44. Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(1), pages 145-76, February.
  45. Valletta, Robert G, 1999. "Declining Job Security," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 17(4), pages S170-97, October.
  46. Richard A. Ippolito, 1994. "Pensions and Indenture Premia," Journal of Human Resources, University of Wisconsin Press, vol. 29(3), pages 795-812.
  47. Edward P. Lazear, 1982. "Pensions as Severance Pay," NBER Working Papers 0944, National Bureau of Economic Research, Inc.
  48. Alan Gustman & Thomas Steinmeier, 1990. "Pension Portability and Labor Mobility: Evidence From the Survey of Income and Program Participation," NBER Working Papers 3525, National Bureau of Economic Research, Inc.
  49. Freeman, Richard B, 1980. "The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits, and Separations," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 94(4), pages 643-73, June.
  50. Christopher Cornwell & Stuart Dorsey & Nasser Mehrzad, 1991. "Opportunistic Behavior by Firms in Implicit Pension Contracts," Journal of Human Resources, University of Wisconsin Press, vol. 26(4), pages 704-725.
  51. Ramey, Garey & Watson, Joel, 1997. "Contractual Fragility, Job Destruction, and Business Cycles," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(3), pages 873-911, August.
  52. Leora Friedberg, 2001. "The Impact of Technological Change on Older Workers: Evidence from Data on Computer Use," NBER Working Papers 8297, National Bureau of Economic Research, Inc.
  53. Even, William E & Macpherson, David A, 1990. "The Gender Gap in Pensions and Wages," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 259-65, May.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Friedberg Leora & Owyang Michael T & Sinclair Tara M, 2006. "Searching For Better Prospects: Endogenizing Falling Job Tenure and Private Pension Coverage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, De Gruyter, vol. 6(1), pages 1-42, August.
  2. Joshua Rauh & Irina Stefanescu & Stephen Zeldes, 2013. "Cost shifting and the freezing of corporate pension plans," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2013-82, Board of Governors of the Federal Reserve System (U.S.).
  3. Nicole Maestas & Julie Zissimopoulos, 2009. "How Longer Work Lives Ease the Crunch of Population Aging," Working Papers, RAND Corporation Publications Department 728, RAND Corporation Publications Department.
  4. Kandice Kapinos, 2009. "On the Determinants of Defined Benefit Pension Plan Conversions," Journal of Economic Interaction and Coordination, Springer, Springer, vol. 30(2), pages 149-167, June.
  5. Leora Friedberg & Anthony Webb, 2005. "Retirement and the Evolution of Pension Structure," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
  6. Leora Friedberg & Michael Owyang, 2004. "Explaining the Evolution of Pension Structure and Job Tenure," NBER Working Papers 10714, National Bureau of Economic Research, Inc.
  7. Cory Koedel & Michael Podgursky, 2011. "Teacher Pension Systems, the Composition of the Teaching Workforce, and Teacher Quality," Working Papers, Department of Economics, University of Missouri 1109, Department of Economics, University of Missouri, revised 10 Apr 2012.
  8. Niko Matouschek & Paolo Ramezzana, 2004. "Labor Market Frictions, Job Insecurity, and the Flexibility of the Employment Relationship," Econometric Society 2004 North American Summer Meetings, Econometric Society 28, Econometric Society.
  9. Kandice Kapinos, 2011. "Changes in Firm Pension Policy: Trends Away from Traditional Defined Benefit Plans," Working Papers, Center for Economic Studies, U.S. Census Bureau 11-36, Center for Economic Studies, U.S. Census Bureau.
  10. Christian E. Weller, 2011. "What Does the Literature Tell Us About the Possible Effect of Changing Retirement Benefits on Public Employee Effectiveness?," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp270, Political Economy Research Institute, University of Massachusetts at Amherst.
  11. Leora Friedberg & Wei Sun & Anthony Webb, 2008. "What Effect Do Time Constraints Have on the Age of Retirement?," Working Papers, Center for Retirement Research at Boston College, Center for Retirement Research wp2008-17, Center for Retirement Research, revised Dec 2008.
  12. Kandice Kapinos, 2009. "On the Determinants of Defined Benefit Pension Plan Conversions," Journal of Labor Research, Springer, Springer, vol. 30(2), pages 149-167, June.
  13. Ann Huff Stevens, 2005. "The More Things Change, The More They Stay the Same: Trends in Long-term Employment in the United States, 1969-2002," NBER Working Papers 11878, National Bureau of Economic Research, Inc.
  14. Fred Robert-Nicoud (University of Geneva) & Niko Matouschek & Paolo Ramezzana (University of Virginia), 2004. "Labor Market Frictions, Job Insecurity and the Flexibility of the Employment Relationship," Econometric Society 2004 Australasian Meetings, Econometric Society 52, Econometric Society.
  15. Alicia H. Munnell & Kelly Haverstick & Geoffrey Sanzenbacher, 2006. "Job Tenure and Pension Coverage," Working Papers, Center for Retirement Research at Boston College, Center for Retirement Research wp2006-18, Center for Retirement Research, revised Oct 2006.
  16. Kandice Kapinos, 2012. "Changes in Firm Pension Policy: Trends Away from Traditional Defined Benefit Plans," Journal of Labor Research, Springer, Springer, vol. 33(1), pages 91-103, March.
  17. Alicia H. Munnell & Dan Muldoon & Steven A. Sass, 2009. "Recessions and Older Workers," Issues in Brief, Center for Retirement Research ib2009-9-2, Center for Retirement Research, revised Jan 2009.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:10714. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.