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Matching Matters in 401(k) Plan Participation

Author

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  • Keenan Dworak-Fisher

    () (U.S. Bureau of Labor Statistics)

Abstract

This study offers new evidence on the effects of the matching contributions made by employers to 401(k) plan accounts on plan participation rates, exploiting microdata from the National Compensation Survey, a large, nationally representative, establishment dataset. It addresses the potential endogeneity of the matching contributions by employing coworker and labor market characteristics as instruments. The results indicate that employer matches have substantial effects. They also indicate that higher match rates tend to be correlated with workers having lower propensities to save; correcting for this endogeneity produces estimates that are bigger than those seen through direct cross-sectional comparisons.

Suggested Citation

  • Keenan Dworak-Fisher, 2010. "Matching Matters in 401(k) Plan Participation," Working Papers 434, U.S. Bureau of Labor Statistics.
  • Handle: RePEc:bls:wpaper:ec100020
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    File URL: https://www.bls.gov/ore/pdf/ec100020.pdf
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    References listed on IDEAS

    as
    1. David H. Autor & Mark G. Duggan, 2003. "The Rise in the Disability Rolls and the Decline in Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 157-206.
    2. John Bound & Timothy Waidmann, 2002. "Accounting for Recent Declines in Employment Rates among Working-Aged Men and Women with Disabilities," Journal of Human Resources, University of Wisconsin Press, vol. 37(2), pages 231-250.
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    More about this item

    Keywords

    401(k); Employer Match;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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