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Incentive Effects of Pensions

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  • Edward P. Lazear

Abstract

Many different types of pension plans exist in American firms. The stipulations of plans vary dramatically, even among large firms, with respect to vesting, relationship of the pension to final salary, maximum and minimum years of service constraints, and maximum and minimum benefit levels. These provisions are examined to determine their effects on worker behavior.Specifically, the paper analyes which plans encourage or discourage appropriate worker responses in hours worked, turnover, human capital investment and effort. An attempt is made to explain the provisions in light of the findings.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1126.

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Date of creation: May 1983
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Publication status: published as Edward P. Lazear. "Incentive Effects of Pensions," in David A. Wise, ed., "Pensions, Labor, and Individual Choice" University of Chicago Press (1985)
Handle: RePEc:nbr:nberwo:1126

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References

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  1. Richard V. Burkhauser & Joseph F. Quinn, 1983. "The Effect of Pension Plans on the Pattern of Life Cycle Compensation," NBER Chapters, in: The Measurement of Labor Cost, pages 395-420 National Bureau of Economic Research, Inc.
  2. Joanne Salop & Steve Salop, 1976. "Self-selection and turnover in the labor market," Special Studies Papers 80, Board of Governors of the Federal Reserve System (U.S.).
  3. Robert C. Merton, 1983. "On Consumption Indexed Public Pension Plans," NBER Chapters, in: Financial Aspects of the United States Pension System, pages 259-290 National Bureau of Economic Research, Inc.
  4. Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-20, September.
  5. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
  6. Edward P. Lazear, 1984. "Pensions as Severance Pay," NBER Working Papers 0944, National Bureau of Economic Research, Inc.
  7. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
  8. Roger H. Gordon & Alan S. Blinder, 1980. "Market wages, reservation wages, and retirement decisions," NBER Chapters, in: Econometric Studies in Public Finance, pages 277-308 National Bureau of Economic Research, Inc.
  9. Jeremy I. Bulow, 1979. "Analysis of Pension Funding Under Erisa," NBER Working Papers 0402, National Bureau of Economic Research, Inc.
  10. Edward P. Lazear, 1982. "Severance Pay, Pensions, and Efficient Mobility," NBER Working Papers 0854, National Bureau of Economic Research, Inc.
  11. Salop, Joanne & Salop, Steven, 1976. "Self-Selection and Turnover in the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 619-27, November.
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Citations

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Cited by:
  1. James M. Poterba & Steven F. Venti & David A. Wise, 2001. "The Transition to Personal Accounts and Increasing Retirement Wealth: Macro and Micro Evidence," NBER Working Papers 8610, National Bureau of Economic Research, Inc.
  2. R. Glenn Hubbard, 1988. "Uncertain Lifetimes, Pensions, and Individual Saving," NBER Working Papers 1363, National Bureau of Economic Research, Inc.
  3. Steven G. Allen & Robert L. Clark, 1987. "Pensions and Firm Performance," NBER Working Papers 2266, National Bureau of Economic Research, Inc.
  4. Kauffman, Kyle D. & Cribari-Neto, Francisco, 1995. "To pay or not to pay: Positive incentives as a calibrating device in the white indenture system," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(3), pages 257-269.
  5. Anna Cristina d'Addio & Maria Chiara Cavalleri, 2013. "Labour Mobility and the Portability of Social Rights in the EU," CESifo Working Paper Series 4153, CESifo Group Munich.
  6. Alexander M. Danzer, 2010. "Retirement Responses to a Generous Pension Reform: Evidence from a Natural Experiment in Eastern Europe," ESCIRRU Working Papers 23, DIW Berlin, German Institute for Economic Research.
  7. Bender, Keith A., 2009. "How are pension integration and pension benefits related?," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(1), pages 26-41, February.
  8. Alicia H. Munnell & Steven A. Sass, 2007. "The Labor Supply of Older Americans," Working Papers, Center for Retirement Research at Boston College wp2007-12, Center for Retirement Research, revised Jun 2007.

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