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Bridging the gap in pension participation: how much can universal tax-deferred pension coverage hope to achieve?

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  • KARAMCHEVA, NADIA S.
  • SANZENBACHER, GEOFFREY

Abstract

In light of the declining pension coverage of low-income workers, policy makers have discussed requiring all employers to offer individual retirement accounts, similar to defined contribution plans. How likely to participate are workers who currently do not have access to a pension plan? We address this question by using plausibly exogenous variation in pension-plan availability to estimate the determinants of participation in a standard selection on unobservables model. We find that currently uncovered low-income workers are fairly likely to participate in a newly offered plan, yet they are much less likely to do so than currently covered workers.

Suggested Citation

  • Karamcheva, Nadia S. & Sanzenbacher, Geoffrey, 2014. "Bridging the gap in pension participation: how much can universal tax-deferred pension coverage hope to achieve?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 13(4), pages 439-459, October.
    • Handle: RePEc:cup:jpenef:v:13:y:2014:i:04:p:439-459_00
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    References listed on IDEAS

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    1. Gur Huberman & Sheena Iyengar & Wei Jiang, 2007. "Defined Contribution Pension Plans: Determinants of Participation and Contributions Rates," Journal of Financial Services Research, Springer;Western Finance Association, vol. 31(1), pages 1-32, February.
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    6. John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2010. "The Impact of Employer Matching on Savings Plan Participation under Automatic Enrollment," NBER Chapters, in: Research Findings in the Economics of Aging, pages 311-327, National Bureau of Economic Research, Inc.
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    9. April Yanyuan Wu & Nadia S. Karamcheva & Alicia H. Munnell & Patrick Purcell, 2013. "How Do the Changing Labor Supply Behavior and Marriage Patterns of Women Affect Social Security Replacement Rates?," Working Papers, Center for Retirement Research at Boston College wp2013-16, Center for Retirement Research.
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    Cited by:

    1. Anek Belbase & Geoffrey T. Sanzenbacher, 2017. "Default Contribution Rates and Participation in Automatic IRAs by Uncovered Workers," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(3), pages 376-388, July.
    2. Ho, Anson T.Y., 2017. "Tax-deferred saving accounts: Heterogeneity and policy reforms," European Economic Review, Elsevier, vol. 97(C), pages 26-41.

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    More about this item

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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