This paper examines how pension plans affect employee behavior and firm performance. Theoretically, the impact of pensions on firm performance cannot be predicted. Firms with pensions should have lower turnover rates and more efficient retirement decisions; their employees will be less likely to shirk. On the other hand, pension compensation is not very closely linked to worker performance and there is some risk that turnover may fall too much. The evidence indicates that although wages do not seem to fall with pension compensation, profit rates are not affected by pension coverage. This suggests that pension coverage is associated with higher productivity, a proposition that is supported by indirect evidence on pensions, turnover, and productivity but not by direct tests of how pension coverage and productivity are correlated.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
2266.
Length: Date of creation: May 1987 Date of revision: Handle: RePEc:nbr:nberwo:2266
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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.:
Edward P. Lazear, 1985.
"Incentive Effects of Pensions,"
NBER Chapters,
in: Pensions, Labor, and Individual Choice, pages 253-282
National Bureau of Economic Research, Inc.
[Downloadable!]
Edward P. Lazear, 1983.
"Pensions as Severance Pay,"
NBER Chapters,
in: Financial Aspects of the United States Pension System, pages 57-90
National Bureau of Economic Research, Inc.
[Downloadable!]
Cited by: (explanations, 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.)
Montgomery, Edward & Shaw, Kathryn & Benedict, Mary Ellen, 1992.
"Pensions and Wages: An Hedonic Price Theory Approach,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(1), pages 111-28, February.
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