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Searching for Better Prospects: Endogenizing Falling Job Tenure and Private Pension Coverage

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  • Leora Friedberg
  • Michael T. Owyang
  • Tara M. Sinclair

Abstract

Recent declines in job tenure have coincided with a shift away from traditional defined benefit (DB) pensions, which reward long tenure. Recent evidence also points to an increase in job-to-job movements by workers, and we document gains in relative wages of job-to-job movers over a similar period. We develop a search model in which firms may offer tenure-based contracts like DB pensions to reduce the incidence of costly on-the-job search by workers. Reduced search costs can, under fairly general conditions, lower the value of deterring search and the use of DB pensions.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11808.

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Date of creation: Dec 2005
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Handle: RePEc:nbr:nberwo:11808

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Cited by:
  1. Joshua Rauh & Irina Stefanescu & Stephen Zeldes, 2013. "Cost shifting and the freezing of corporate pension plans," Finance and Economics Discussion Series 2013-82, Board of Governors of the Federal Reserve System (U.S.).
  2. Leora Friedberg & Michael T. Owyang, 2004. "Explaining the evolution of pension structure and job tenure," Working Papers 2002-022, Federal Reserve Bank of St. Louis.
  3. Ashok Thomas & Luca Spataro, 2013. "Pension funds and Market Efficiency: A review," Discussion Papers 2013/164, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

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