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Pensions, Bonding, and Lifetime Jobs

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Author Info
Steven G. Allen
Robert L. Clark
Ann A. McDermed

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Abstract

A well-known, if underappreciated, finding in the mobility literature is that turnover is much lower in jobs covered by pensions than in other jobs. This could result from capital losses for job changes created by most benefit formulas, the tendency of turnover-prone individuals to avoid jobs covered by pensions, or higher overall compensation levels in such jobs. A switching bivariate probit model of pension coverage and turnover is developed to estimate the effect of each of these factors. The results show that capital losses are the main factor responsible for lower turnover in jobs covered by pensions, but self-selection and compensation levels also play an important role. This is the first direct evidence that bonding is important for understanding long-term employment relationships.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3688.

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Date of creation: Apr 1991
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Publication status: published as Journal of Human Resources, Summer 1993, vol. 28, no. 3, p. 463-481
Handle: RePEc:nbr:nberwo:3688

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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.:
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  1. Andrietti, Vincenzo & Hildebrand, Vincent, 2001. "Pension Portability and Labour Mobility in the United States. New Evidence from SIPP Data," IRISS Working Paper Series 2001-03, IRISS at CEPS/INSTEAD. [Downloadable!]
    Other versions:
  2. Leora Friedberg & Michael Owyang, 2004. "Explaining the Evolution of Pension Structure and Job Tenure," NBER Working Papers 10714, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Vincenzo Andrietti & Vincent Hildebrand, 2004. "Evaluating Pension Portability Reforms. The Tax Reform Act Of 1986 As A Natural Experiment," Economics Working Papers we045220, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  4. Vincenzo Andrietti & Eleonora Patacchini, 2004. "Occupationa Pensions, Wages And Tenure Wage Profiles," Economics Working Papers we043612, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  5. Alicia H. Munnell & Kelly Haverstick & Geoffrey Sanzenbacher, 2006. "Job Tenure and Pension Coverage," Working Papers, Center for Retirement Research at Boston College wp2006-18, Center for Retirement Research, revised Oct 2006. [Downloadable!]
  6. Gary V. Engelhardt, 2000. "Have 401(k)s Raised Household Saving? Evidence from the Health and Retirement Study," Social and Economic Dimensions of an Aging Population Research Papers 33, McMaster University. [Downloadable!]
  7. Eric M. Engen & William G. Gale & John Karl Scholz, 1996. "The Effects of Tax-Based Saving Incentives On Saving and Wealth," NBER Working Papers 5759, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. repec:ese:iserwp: is not listed on IDEAS
  9. Vincenzo Andrietti, 2004. "Pension Choices And Job Mobility In The Uk," Economics Working Papers we043713, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  10. Sundaram, Rangarajan K. & Yermack, David, 2006. "Pay Me Later: Inside Debt and Its Role in Managerial Compensation," SIFR Research Report Series 43, Swedish Institute for Financial Research. [Downloadable!]
  11. Eric Parrado & Asena Caner & Edward N. Wolff, 2005. "Occupational and Industrial Mobility in the United States 1969–93," Economics Working Paper Archive wp416, Levy Economics Institute, The. [Downloadable!]
  12. Marjorie Baldwin & Edward J. Schumacher, 1999. "Job Mobility among Workers with Disabilities," Working Papers 9911, East Carolina University, Department of Economics. [Downloadable!]
  13. David McCarthy, 2003. "A Lifecycle Analysis of Defined Benefit Pension Plans," Working Papers wp053, University of Michigan, Michigan Retirement Research Center. [Downloadable!]
  14. Parrado, E. & Wolff, E., 1999. "Occupational and Industry Mobility in the United States, 1969-1992," Working Papers 99-20, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  15. Alan L. Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, 1993. "The Role of Pensions in the Labor Market," NBER Working Papers 4295, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  16. Edward Montgomery & Kathryn Shaw, 1992. "Pensions and Wage Premia," NBER Working Papers 3985, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  17. Engen, Eric M & Gale, William G & Scholz, John Karl, 1996. "The Illusory Effects of Saving Incentives on Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 113-38, Fall. [Downloadable!] (restricted)
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