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Retirement Plan Participation in the United States: Do Public Sector Employees Save More?

  • Chatterjee, Swarn
  • Zahirovic-Herbert, Velma

This study examines retirement plan participation and savings behavior for American public and private sector employees using the Panel Study of Income Dynamics (PSID) data set. This paper also examines the determinants of preference for a diversified portfolio within the retirement plans. The findings of this study indicate that the population’s plan participation increases with age, income, and education level. The public sector employees are more likely than others to participate in defined benefits plans. Conversely, they are less likely to participate in the defined contribution plans. Also, the public sector employees who participate in defined contribution plans hold lower amounts within their retirement accounts. The public sector employees are more likely to diversify their retirement portfolios or allocate them in bonds or annuities and are less likely to hold all or most of their wealth in stocks. Preference for diversification also increases with age, income and educational attainment.

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File URL: https://mpra.ub.uni-muenchen.de/13546/1/MPRA_paper_13546.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13546.

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Date of creation: Feb 2009
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Publication status: Published in European Journal of Social Sciences 4.7(2009): pp. 30-40
Handle: RePEc:pra:mprapa:13546
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Web page: https://mpra.ub.uni-muenchen.de

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  1. Guiso, Luigi & Jappelli, Tullio, 2000. "Household Portfolios in Italy," CEPR Discussion Papers 2549, C.E.P.R. Discussion Papers.
  2. Steven F. Venti & David A. Wise, 1990. "But They Don't Want to Reduce Housing Equity," NBER Chapters, in: Issues in the Economics of Aging, pages 13-32 National Bureau of Economic Research, Inc.
  3. Steven F. Venti & David A. Wise, 1996. "The Wealth of Cohorts: Retirement Saving and the Changing Assets of Older Americans," NBER Working Papers 5609, National Bureau of Economic Research, Inc.
  4. Joseph F. Quinn, 1979. "Wage Differentials among Older Workers in the Public and Private Sectors," Journal of Human Resources, University of Wisconsin Press, vol. 14(1), pages 41-62.
  5. Leslie E. Papke, 1995. "Participation in and Contributions to 401(k) Pension Plans: Evidence from Plan Data," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 311-325.
  6. James M. Poterba & Steven F. Venti & David A. Wise, 1996. "How Retirement Saving Programs Increase Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 91-112, Fall.
  7. Charles Brown & Greg J. Duncan & Frank P. Stafford, 1996. "Data Watch: The Panel Study of Income Dynamics," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 155-168, Spring.
  8. Karen E. Dynan & Jonathan Skinner & Stephen P. Zeldes, 2000. "Do the rich save more?," Finance and Economics Discussion Series 2000-52, Board of Governors of the Federal Reserve System (U.S.).
  9. Bloom, David E & Freeman, Richard B, 1992. "The Fall in Private Pension Coverage in the United States," American Economic Review, American Economic Association, vol. 82(2), pages 539-45, May.
  10. Campbell, John Y. & Viceira, Luis M., 2002. "Strategic Asset Allocation: Portfolio Choice for Long-Term Investors," OUP Catalogue, Oxford University Press, number 9780198296942.
  11. Lisa Keister, 2003. "Sharing the wealth: The effect of siblings on adults’ wealth ownership," Demography, Springer, vol. 40(3), pages 521-542, August.
  12. William F. Bassett & Michael J. Fleming & Anthony P. Rodrigues, 1998. "How workers use 401(k) plans: the participation, contribution, and withdrawal decisions," Staff Reports 38, Federal Reserve Bank of New York.
  13. Engelhardt, Gary V., 2003. "Reasons for job change and the disposition of pre-retirement lump-sum pension distributions," Economics Letters, Elsevier, vol. 81(3), pages 333-339, December.
  14. Quinn, Joseph F, 1982. "Pension Wealth of Government and Private Sector Workers," American Economic Review, American Economic Association, vol. 72(2), pages 283-87, May.
  15. Poterba, James M & Venti, Steven F & Wise, David A, 1998. "401(k) Plans and Future Patterns of Retirement Saving," American Economic Review, American Economic Association, vol. 88(2), pages 179-84, May.
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