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Are Male/Female Earnings Differentials Related to Life-Expectancy-Caused Pension Cost Differences?

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  • Moore, Robert L

Abstract

This paper argues that employers using defined-benefit pension plans are forced by competitive conditions to lower females' earnings to account for more costly pension liabilities resulting from longer life expectancy. A newly constructed data set containing employee salary histories and pension plan descriptions from five firms is used to calculate how much more it costs to employ a female versus a male worker, identical except for life expectancy. It is demonstrated that each dollar of increased pension liabilities results in a reduction in females' salaries by fifty-five cents. Implications of these findings for the 1983 Supreme Court ruling involving sex-linked pension benefits are discussed. Copyright 1987 by Oxford University Press.

Suggested Citation

  • Moore, Robert L, 1987. "Are Male/Female Earnings Differentials Related to Life-Expectancy-Caused Pension Cost Differences?," Economic Inquiry, Western Economic Association International, vol. 25(3), pages 389-401, July.
    • Handle: RePEc:oup:ecinqu:v:25:y:1987:i:3:p:389-401
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    Cited by:

    1. Granqvist, Lena & Selén, Jan & Ståhlberg, Ann-Charlotte, 2002. "Mandatory Earnings-Related Insurance Rights, Human Capital and the Gender Earnings Gap in Sweden," Working Paper Series 179, Trade Union Institute for Economic Research.
    2. Montgomery, Edward & Shaw, Kathryn, 1997. "Pensions and Wage Premia," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 510-522, July.
    3. 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 111-128, February.

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