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Pensions and Wage Premia

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Author Info
Edward Montgomery
Kathryn Shaw

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Abstract

In this paper we use that the theory of compensating differentials to identify sources of heterogeneity in firms' costs of providing fringe benefits and hence heterogeneity in the magnitude of the compensating differential. We estimate the relationship between pensions and wages controlling for variations in the size of the compensating differential related to firm size or the presence of a union. Both firm size and unionism are commonly associated with the payment of wage premia and/or the presence of market power where the costs of fringe benefits to the firm may be less. Our results are consistent with these a priori expectations and suggest that the magnitude of the compensating differential is significantly higher in nonunion and in small firms.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3985.

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Date of creation: Feb 1992
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Handle: RePEc:nbr:nberwo:3985

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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.:
  1. Dorsey, Stuart, 1987. "The Economic Functions of Private Pensions: An Empirical Analysis," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages S171-89, October. [Downloadable!] (restricted)
  2. Ronald G. Ehrenberg, 1980. "Retirement system characteristics and compensating wage differentials in the public sector," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 33(4), pages 470-483, July.
  3. Carmichael, H Lorne, 1989. "Self-Enforcing Contracts, Shirking, and Life Cycle Incentives," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 65-83, Fall. [Downloadable!] (restricted)
  4. Pearce, James E, 1990. "Tenure, Unions, and the Relationship between Employer Size and Wages," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 251-69, April. [Downloadable!] (restricted)
  5. Oi, Walter Y, 1983. "Heterogeneous Firms and the Organization of Production," Economic Inquiry, Oxford University Press, vol. 21(2), pages 147-71, April.
  6. Steven G. Allen & Robert L. Clark, 1985. "Unions, Pension Wealth, and Age-Compensation Profiles," NBER Working Papers 1677, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. George A. Akerlof & Lawrence F. Katz, 1989. "Workers' Trust Funds and the Logic of Wage Profiles," NBER Working Papers 2548, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Robert S. Smith & Ronald G. Ehrenberg, 1981. "Estimating Wage-Fringe Trade-Offs: Some Data Problems," NBER Working Papers 0827, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Jeremy I. Bulow, 1985. "The Relationship between Wages and Benefits," NBER Chapters, in: Pensions, Labor, and Individual Choice, pages 379-398 National Bureau of Economic Research, Inc. [Downloadable!]
  10. Duncan, Greg J & Stafford, Frank P, 1980. "Do Union Members Receive Compensating Wage Differentials?," American Economic Review, American Economic Association, vol. 70(3), pages 355-71, June. [Downloadable!] (restricted)
  11. Brown, Charles, 1980. "Equalizing Differences in the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 94(1), pages 113-34, February. [Downloadable!] (restricted)
  12. Biddle, Jeff E & Zarkin, Gary A, 1988. "Worker Preferences and Market Compensation for Job Risk," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 660-67, November. [Downloadable!] (restricted)
  13. Laurence J. Kotlikoff & David A. Wise, 1985. "Labor Compensation and the Structure of Private Pension Plans: Evidence for Contractual versus Spot Labor Markets," NBER Chapters, in: Pensions, Labor, and Individual Choice, pages 55-88 National Bureau of Economic Research, Inc. [Downloadable!]
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  14. Richard A. Ippolito, 1991. "Encouraging long-term tenure: Wage tilt or pensions?," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 44(3), pages 520-535, April.
  15. Epple, Dennis, 1987. "Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 59-80, February. [Downloadable!] (restricted)
  16. 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. [Downloadable!] (restricted)
  17. Dickens, William T & Lang, Kevin, 1988. "Labor Market Segmentation and the Union Wage Premium," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 527-30, August. [Downloadable!] (restricted)
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  18. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  19. 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. [Downloadable!] (restricted)
    Other versions:
  20. Schiller, Bradley R & Weiss, Randall D, 1980. "Pensions and Wages: A Test for Equalizing Differences," The Review of Economics and Statistics, MIT Press, vol. 62(4), pages 529-38, November. [Downloadable!] (restricted)
  21. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December. [Downloadable!] (restricted)
  22. Alan L. Gustman & Thomas L. Steinmeier, 1987. "Pensions, Efficiency Wages, and Job Mobility," NBER Working Papers 2426, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  23. 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. [Downloadable!] (restricted)
Full references

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.)

  1. Meyer, Rebecca & Orazem, Peter & Wachenheim, William A., 2002. "Labor Market Implications of Rising Costs of Employer-Provided Health Insurance," Staff General Research Papers 10016, Iowa State University, Department of Economics. [Downloadable!]
  2. Charles Sutcliffe, 2007. "Should Defined Benefit Pension Schemes be Career Average or Final Salary?," ICMA Centre Discussion Papers in Finance icma-dp2007-06, Henley Business School, Reading University. [Downloadable!]
  3. Anthony Marino & Jan Zabojnik, 2006. "Work-Related Perks, Agency Problems, and Optimal Incentive Contracts," Working Papers 1107, Queen's University, Department of Economics. [Downloadable!]
    Other versions:
  4. Erwin Ooghe & Erik Schokkaert & Jef Flechet, 2003. "The Incidence of Social Security Contributions: An Empirical Analysis," Empirica, Springer, vol. 30(2), pages 81-106, June. [Downloadable!] (restricted)
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