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Explaining Pension Dynamics

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  • Rebecca A. Luzadis
  • Olivia S. Mitchell

Abstract

Whether and how the labor market will adapt to anticipated changes in the workforce age distribution depends on how able companies are to induce desired turnover patterns among older and younger employees. This paper contends that companies can and will use pension plan provisions as powerful incentives to induce people to remain on their jobs, and perhaps even more importantly to leave at later ages. A longitudinal file of collectively bargained pension plans gathered by the United States Bureau of Labor Statistics is examined empirically. We find dramatic increases in benefit levels, reductions in early, normal and deferred retirement ages, and declines in the age at which pension present values peak (with retirement after that age penalized). Several explanations for these observed pension outcomes are evaluated empirically. We believe that these findings indicate how employer-provided pensions can and will play an important role in helping companies induce desired turnover patterns as the workforce ages.

Suggested Citation

  • Rebecca A. Luzadis & Olivia S. Mitchell, 1991. "Explaining Pension Dynamics," Journal of Human Resources, University of Wisconsin Press, vol. 26(4), pages 679-703.
    • Handle: RePEc:uwp:jhriss:v:26:y:1991:i:4:p:679-703
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    Cited by:

    1. Mitchell, O.S. & Piggott, J., 2016. "Workplace-Linked Pensions for an Aging Demographic," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 865-904, Elsevier.
    2. Olivia S. Mitchell, "undated". "New Trends in Pension Benefit and Retirement Provisions," Pension Research Council Working Papers 2000-1, Wharton School Pension Research Council, University of Pennsylvania.
    3. Courtney Coile & Jonathan Gruber, 2001. "Social Security Incentives for Retirement," NBER Chapters, in: Themes in the Economics of Aging, pages 311-354, National Bureau of Economic Research, Inc.
    4. Dan A. Black, 1996. "Family Health Benefits and Worker Turnover," Labor and Demography 9604001, University Library of Munich, Germany.
    5. Olivia S. Mitchell, "undated". "Retirement Systems in Developed and Developing Countries: Institutional Features, Economic Effects, and Lessons for Economies in Transition," Pension Research Council Working Papers 94-3, Wharton School Pension Research Council, University of Pennsylvania.
    6. Garen, John & Berger, Mark & Scott, Frank, 1996. "Pensions, non-discrimination policies, and the employment of older workers," The Quarterly Review of Economics and Finance, Elsevier, vol. 36(4), pages 417-429.
    7. Gustman, A.L. & Mitchell, O.S. & Steinmeier, T.L., 1993. "The Role of Pensions in the Labor Market," Papers 93-07, Cornell - Center for Advanced Human Resource Studies.
    8. Ruhm, Christopher J., 1996. "Do pensions increase the labor supply of older men?," Journal of Public Economics, Elsevier, vol. 59(2), pages 157-175, February.
    9. Vittas, Dimitri, 1998. "Regulatory controversies of private pension funds," Policy Research Working Paper Series 1893, The World Bank.
    10. Alan L. Gustman & F. Thomas Juster, 1995. "Income and Wealth of Older American Households: Modeling Issues for Public Policy Analysis," NBER Working Papers 4996, National Bureau of Economic Research, Inc.
    11. Samwick, Andrew A., 1998. "New evidence on pensions, social security, and the timing of retirement," Journal of Public Economics, Elsevier, vol. 70(2), pages 207-236, November.
    12. Olivia S. Mitchell, "undated". "Developments in Pensions," Pension Research Council Working Papers 98-4, Wharton School Pension Research Council, University of Pennsylvania.
    13. Alan L. Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, 1994. "Retirement Research Using the Health and Retirement Survey," NBER Working Papers 4813, National Bureau of Economic Research, Inc.
    14. Alan L. Gustman & Olivia S. Mitchell, 1990. "Pensions and the U.S. Labor Market," NBER Working Papers 3331, National Bureau of Economic Research, Inc.

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