Unions, Pension Wealth, and Age-Compensation Profiles
This paper examines the effect of unions on both the magnitude and distribution of pension benefits. Our empirical results show that beneficiaries in collectively bargained plans receive larger benefits when they retire, receive larger increases in their benefits after they retire, and retire at an earlier age than beneficiaries in other pension plans. As a result, the pension wealth of union beneficiaries is 50 to 109 percent greater than that of nonunion beneficiaries. Just as wage differentials within and across establishments are smaller among union workers, benefit differentials within and across cohorts of retirees are smaller among union beneficiaries. This results from the smaller weight given to salary average in determining initial benefits and the larger percentage increases given to those who have been retired the longest under post-retirement increases. The more compressed benefit structure under unionism causes the union-nonunion compensation (wages plus pension contributions) differential to decline more quickly than the union-nonunion wage differential over the life cycle.
|Date of creation:||Aug 1985|
|Date of revision:|
|Publication status:||published as Allen, Steven G. and Robert L.Clark. "Unions, Pension Wealth, and Age-Compensation Profiles," Industrial and Labor Relations Review, Vol. 39, No. 4,(July 1986), pp. 509-517.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
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- Richard B. Freeman, 1980. "The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits, and Separations," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 643-673.
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- Duane E. Leigh, 1981. "The Effect of Unionism on Workers' Valuation of Future Pension Benefits," ILR Review, Cornell University, ILR School, vol. 34(4), pages 510-521, July.
- Martin Feldstein & Randall Morck, 1983.
"Pension Funding Decisions, Interest Rate Assumptions, and Share Prices,"
in: Financial Aspects of the United States Pension System, pages 177-210
National Bureau of Economic Research, Inc.
- Martin Feldstein & Randall Morck, 1982. "Pension Funding Decisions, Interest Rate Assumptions and Share Prices," NBER Working Papers 0938, National Bureau of Economic Research, Inc.
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