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What Do Unions Do To Pension Performance?

Author

Listed:
  • WILLIAM E. EVEN
  • DAVID A. MACPHERSON

Abstract

type="main" xml:id="ecin12081-abs-0001"> Unions can have either positive or negative effects on risk-adjusted returns in pension plans. On the positive side, a union can improve monitoring of pension advisors and asset managers. On the negative side, the union may sacrifice returns by making investments that promote union goals. This paper discusses how the structure of the pension plan affects the union's ability and willingness to sacrifice returns to promote union goals. Using panel data on over 38,000 pension plans drawn from IRS Form 5500 filings between 1988 and 2008, we find the lowest performing plans are unionized multi-employer plans. Among defined contribution plans, the underperformance of multi-employer union plans disappears when the pension is controlled by individual participants. (JEL J32, J51)

Suggested Citation

  • William E. Even & David A. Macpherson, 2014. "What Do Unions Do To Pension Performance?," Economic Inquiry, Western Economic Association International, vol. 52(3), pages 1173-1189, July.
    • Handle: RePEc:bla:ecinqu:v:52:y:2014:i:3:p:1173-1189
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    File URL: http://hdl.handle.net/10.1111/ecin.2014.52.issue-3
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    Cited by:

    1. Kim, Dongwoo & Koedel, Cory & Xiang, P. Brett, 2021. "The trade-off between pension costs and salary expenditures in the public sector," Journal of Pension Economics and Finance, Cambridge University Press, vol. 20(1), pages 151-168, January.
    2. Dillan Bono‐Lunn, 2024. "The impacts of U.S. right‐to‐work laws on free riding, unionization, and compensation," Southern Economic Journal, John Wiley & Sons, vol. 90(3), pages 769-791, January.
    3. Blanchflower, David G., 2006. "A Cross-Country Study of Union Membership," IZA Discussion Papers 2016, IZA Network @ LISER.
    4. J. Adam Cobb, 2015. "Risky Business: The Decline of Defined Benefit Pensions and Firms’ Shifting of Risk," Organization Science, INFORMS, vol. 26(5), pages 1332-1350, October.

    More about this item

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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