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Negative reciprocity and retrenched pension rights

  • Montizaan Raymond
  • Cörvers Frank
  • Grip Andries de
  • Dohmen Thomas

    (ROA rm)

We document the importance of negatively reciprocal inclinations in labor relationshipsby showing that a retrenchment of pension rights, which is perceived as unfair,causes a larger reduction in job motivation the stronger workers’ negatively reciprocalinclinations are. We exploit unique matched survey and administrative data on maleemployees in the public sector in the Netherlands and compare the job motivation ofemployees born in 1950, who faced a substantial retrenchment of their pension rightsresulting from a pension reform in 2006, to that of slightly older employees who remainentitled to more generous pension benefits. Job motivation is significantly lower amongnegatively reciprocal employees who were affected by the reform. The negative effecton job motivation is greater for negative reciprocal employees born very shortly afterthe cut-off date of January 1, 1950, as well as for those with many untreated colleagues,and who therefore arguably perceive the policy change as being more unfair. We alsofind that the treatment effect is stronger among workers who are more likely to holdtheir employer accountable for the drop in their pension rights, that is, those who workfor the national government.

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Paper provided by Maastricht University, Research Centre for Education and the Labour Market (ROA) in its series ROA Research Memorandum with number 015.

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Date of creation: 2012
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Handle: RePEc:unm:umaror:2012015
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