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Pensions and Wage Premia

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  • Montgomery, Edward
  • Shaw, Kathryn

Abstract

The authors hypothesize that the magnitude of the pension-wage compensating differential should vary by sector, because sectoral differences in firms' technologies results in cost differences in providing nonwage benefits. Using data from the Survey of Consumer Finances, they find that the pension-wage compensating differential is smaller in the union sector and large firms than in small, nonunion firms. Controls for sectoral selectivity do no alter the results. Thus, workers at unionized and large firms pay a lower implicit price for their pensions either because pensions have productivity-enhancing effects or because these firms pay workers economic rents via pensions. Copyright 1997 by Oxford University Press.

Suggested Citation

  • Montgomery, Edward & Shaw, Kathryn, 1997. "Pensions and Wage Premia," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 510-522, July.
    • Handle: RePEc:oup:ecinqu:v:35:y:1997:i:3:p:510-22
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    Cited by:

    1. Lu, Yi & Tao, Zhigang & Wang, Yijiang, 2010. "Union effects on performance and employment relations: Evidence from China," China Economic Review, Elsevier, vol. 21(1), pages 202-210, March.
    2. Danzer, Alexander M. & Dolton, Peter J., 2012. "Total Reward and pensions in the UK in the public and private sectors," Labour Economics, Elsevier, vol. 19(4), pages 584-594.
    3. Anthony M. Marino & Ján Zábojník, 2008. "Work‐related perks, agency problems, and optimal incentive contracts," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 565-585, June.
    4. Christian E. Weller, 2011. "What Does the Literature Tell Us About the Possible Effect of Changing Retirement Benefits on Public Employee Effectiveness?," Working Papers wp270, Political Economy Research Institute, University of Massachusetts at Amherst.
    5. Li-Hsuan Huang & Hsin-Yi Huang, 2017. "Real Wage Stagnancy: Evidence From Taiwan," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(02), pages 485-506, April.
    6. Gul, Ferdinand A. & Cheng, Louis T.W. & Leung, T.Y., 2011. "Perks and the informativeness of stock prices in the Chinese market," Journal of Corporate Finance, Elsevier, vol. 17(5), pages 1410-1429.
    7. Mayer, Rebecca & Orazem, Peter F. & Wachenheim, William A., 2002. "Labor Supply Responses to Employer-Provided Health Insurance," ISU General Staff Papers 200204010800001219, Iowa State University, Department of Economics.
    8. Cooper, Russell W. & Ross, Thomas W., 2001. "Pensions: theories of underfunding," Labour Economics, Elsevier, vol. 8(6), pages 667-689, December.
    9. Jonathan R. Peterson, 2023. "Employee bonding and turnover efficiency," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(1), pages 223-244, January.
    10. Wang, Leran, 2021. "Fertility, Imperfect Labor Market, and Notional Defined Contribution Pension," The Journal of the Economics of Ageing, Elsevier, vol. 20(C).
    11. Maria Donovan Fitzpatrick, 2015. "How Much Are Public School Teachers Willing to Pay for Their Retirement Benefits?," American Economic Journal: Economic Policy, American Economic Association, vol. 7(4), pages 165-188, November.
    12. Meyer, Rebecca & Orazem, Peter & Wachenheim, William A., 2002. "Labor Market Implications of Rising Costs of Employer-Provided Health Insurance," Staff General Research Papers Archive 10016, Iowa State University, Department of Economics.
    13. Jan Erik Askildsen & Norman J. Ireland, 2003. "Bargaining Credibility and the Limits to Within‐firm Pensions," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 74(4), pages 515-528, December.
    14. Danzer, Alexander M. & Dolton, Peter, 2011. "Total Reward in the UK in the Public and Private Sectors," IZA Discussion Papers 5656, Institute of Labor Economics (IZA).
    15. Erwin Ooghe & Erik Schokkaert & Jef Flechet, 2003. "The Incidence of Social Security Contributions: An Empirical Analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 30(2), pages 81-106, June.

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