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State Auto-IRA Policies and Firm Behavior: Lessons from Administrative Tax Data

Author

Listed:
  • Adam Bloomfield
  • Lucas Goodman
  • Manita Rao
  • Sita Slavov

Abstract

Several states have recently attempted to boost retirement saving by adopting “auto-IRA” policies that require employers not currently offering an employer-sponsored retirement plan (ESRP) to either (1) establish an ESRP or (2) enroll employees in state-facilitated Individual Retirement Accounts (IRAs). We identify the effect of these state policies on firm decisions to offer ESRPs, exploiting the phased rollout of these policy treatments across states and employer size categories. Using U.S. tax microdata, we estimate that about 17% of treated firms have been induced to offer an ESRP by these policies, although there is substantial heterogeneity in these effects across firm and worker characteristics. This effect is large considering that, for employers, establishing and maintaining an ESRP is more costly than utilizing the state-facilitated IRAs. We explore both rational and behavioral explanations for why firms might choose the higher-cost option to comply with state auto-IRA policies.

Suggested Citation

  • Adam Bloomfield & Lucas Goodman & Manita Rao & Sita Slavov, 2024. "State Auto-IRA Policies and Firm Behavior: Lessons from Administrative Tax Data," NBER Working Papers 32817, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32817
    Note: AG LS PE
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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