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What Do Unions Do to Pension Performance?

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  • Even, William E.

    (Miami University)

  • Macpherson, David A.

    (Trinity University)

Abstract

This study argues that the promotion of union goals could have positive, negative, or neutral effects on risk adjusted return performance. Moreover, the union's ability and incentive to use pension assets to promote union goals will vary with the design of the pension. Using panel data on over 36,000 pension plans drawn from IRS Form 5500 filings, we empirically estimate the effects of unions on risk adjusted returns and find that the union effect on performance varies in ways that are consistent with our priors. In particular, unions have the largest negative effect among multi-employer defined contribution plans and the negative effect of unions can be eliminated by a switch to participant direction. Also, we find that unions improve performance for single employer defined contribution plans.

Suggested Citation

  • Even, William E. & Macpherson, David A., 2010. "What Do Unions Do to Pension Performance?," IZA Discussion Papers 5256, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp5256
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    References listed on IDEAS

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    1. repec:pri:cepsud:182lee is not listed on IDEAS
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    Citations

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    Cited by:

    1. Blanchflower, David G., 2006. "A Cross-Country Study of Union Membership," IZA Discussion Papers 2016, Institute of Labor Economics (IZA).
    2. J. Adam Cobb, 2015. "Risky Business: The Decline of Defined Benefit Pensions and Firms’ Shifting of Risk," Organization Science, INFORMS, vol. 26(5), pages 1332-1350, October.
    3. Kim, Dongwoo & Koedel, Cory & Xiang, P. Brett, 2021. "The trade-off between pension costs and salary expenditures in the public sector," Journal of Pension Economics and Finance, Cambridge University Press, vol. 20(1), pages 151-168, January.

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    More about this item

    Keywords

    defined contribution; unions; rate of return; pension; defined benefit;
    All these keywords.

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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