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Searching for Better Prospects: Endogenizing Falling Job Tenure and Private Pension Coverage

  • Leora Friedberg
  • Michael T. Owyang
  • Tara M. Sinclair

Recent declines in job tenure have coincided with a shift away from traditional defined benefit (DB) pensions, which reward long tenure. Recent evidence also points to an increase in job-to-job movements by workers, and we document gains in relative wages of job-to-job movers over a similar period. We develop a search model in which firms may offer tenure-based contracts like DB pensions to reduce the incidence of costly on-the-job search by workers. Reduced search costs can, under fairly general conditions, lower the value of deterring search and the use of DB pensions.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11808.

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Date of creation: Dec 2005
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Publication status: published as Friedberg Leora & Owyang Michael T & Sinclair Tara M, 2006. "Searching For Better Prospects: Endogenizing Falling Job Tenure and Private Pension Coverage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-42, August.
Handle: RePEc:nbr:nberwo:11808
Note: AG LS
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