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Pensions, Efficiency Wages, and Job Mobility

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  • Alan L. Gustman
  • Thomas L. Steinmeier

Abstract

This paper finds that compensation premia and not pension backloading are responsible for the low mobility rates from jobs with pensions. Compensation premia, which may represent efficiency wages, are calculated as the difference in compensation between the current job and the best alternative job, allowing for the fact that such premia are observed only for job changers. The amount of pension backloading is calculated from data provided by employers to the Survey of Consumer Finances, greatly improving the precision of measurement over past efforts. This finding has important implications for labor market analysis and for policies concerning pension regulation.

Suggested Citation

  • Alan L. Gustman & Thomas L. Steinmeier, 1987. "Pensions, Efficiency Wages, and Job Mobility," NBER Working Papers 2426, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2426
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    References listed on IDEAS

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    1. Steven G. Allen & Robert L. Clark & Ann A. McDermed, 1991. "Pensions, Bonding, and Lifetime Jobs," NBER Working Papers 3688, National Bureau of Economic Research, Inc.
    2. Martin Segal, 1986. "Post-Institutionalism in Labor Economics: The Forties and Fifties Revisited," ILR Review, Cornell University, ILR School, vol. 39(3), pages 388-403, April.
    3. Laurence J. Kotlikoff & David A. Wise, 1985. "Labor Compensation and the Structure of Private Pension Plans: Evidence for Contractual versus Spot Labor Markets," NBER Chapters,in: Pensions, Labor, and Individual Choice, pages 55-88 National Bureau of Economic Research, Inc.
    4. Olivia S. Mitchell, 1983. "Fringe Benefits and the Cost of Changing Jobs," ILR Review, Cornell University, ILR School, vol. 37(1), pages 70-78, October.
    5. Alan L. Gustman & Thomas L. Steinmeier, 1988. "An Analysis Of Pension Benefit Formulas, Pension Wealth And Incentives From Pensions," NBER Working Papers 2535, National Bureau of Economic Research, Inc.
    6. Laurence J. Kotlikoff & David A. Wise, 1987. "The Incentive Effects of Private Pension Plans," NBER Chapters,in: Issues in Pension Economics, pages 283-340 National Bureau of Economic Research, Inc.
    7. Jeremy I. Bulow, 1982. "What are Corporate Pension Liabilities?," The Quarterly Journal of Economics, Oxford University Press, vol. 97(3), pages 435-452.
    8. Ann P. Bartel & George J. Borjas, 1977. "Middle-Age Job Mobility: Its Determinants and Consequences," NBER Working Papers 0161, National Bureau of Economic Research, Inc.
    9. Alan B. Krueger & Lawrence H. Summers, 1986. "Reflections on the Inter-Industry Wage Structure," NBER Working Papers 1968, National Bureau of Economic Research, Inc.
    10. Steven G. Allen & Robert L. Clark, 1987. "Pensions and Firm Performance," NBER Working Papers 2266, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Jonathan Gruber, 1998. "Health Insurance and the Labor Market," NBER Working Papers 6762, National Bureau of Economic Research, Inc.
    2. Montgomery, Edward & Shaw, Kathryn, 1997. "Pensions and Wage Premia," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 510-522, July.
    3. Alan L. Gustman & Thomas L. Steinmeier, 1989. "Evaluating Pension Policies in a Model with Endogeous Contributions," NBER Working Papers 3085, National Bureau of Economic Research, Inc.
    4. Vincenzo Andrietti & Vincent Hildebrand, 2001. "Pension Portability and Labour Mobility in the United States. New Evidence from SIPP Data," Social and Economic Dimensions of an Aging Population Research Papers 42, McMaster University.
    5. Alan L. Gustman & Thomas L. Steinmeier, 1988. "An Analysis Of Pension Benefit Formulas, Pension Wealth And Incentives From Pensions," NBER Working Papers 2535, National Bureau of Economic Research, Inc.
    6. Steven G. Allen & Robert L. Clark & Ann A. McDermed, 1991. "Pensions, Bonding, and Lifetime Jobs," NBER Working Papers 3688, National Bureau of Economic Research, Inc.
    7. Brigitte C. Madrian, 1994. "Employment-Based Health Insurance and Job Mobility: Is there Evidence of Job-Lock?," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 27-54.
    8. Kenneth Trager & James Francis & Kevin SigRist, "undated". "Florida's Public Pension Reform Debate: A Discussion of the Issues and Estimates of the Option Costs," Pension Research Council Working Papers 99-23, Wharton School Pension Research Council, University of Pennsylvania.
    9. Haynes, Jonathan B. & Sessions, John G., 2013. "Work now, pay later? An empirical analysis of the pension–pay trade off," Economic Modelling, Elsevier, vol. 30(C), pages 835-843.

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