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An Analysis of Risk-Taking Behavior for Public Defined Benefit Pension Plans


  • T. William Lester

    () (University of NOrth Carolina at Chapel Hill)

  • Nichola Lowe

    () (University of North Carolina at Chapel Hill)

  • Allan Freyer

    (University of North Carolina at Chapel Hill)


State incentive granting for the purpose of firm retention or recruitment remains highly controversial and is often portrayed as antithetical to long-range economic development planning. This paper uses quasi-experimental methods to measure the impact of state-level economic development incentives on employment growth at the establishment level in North Carolina. Using North Carolina’s rich history of strategic planning and sector-based economic development as a backdrop, we develop a theory of sectoral “mediation.” This enables us to compare the effectiveness of incentives offered in mediated and nonmediated industries and show that when incentives are coupled with sectoral economic development efforts they generate substantially stronger employment effects than at establishments with limited sector-based institutional support.

Suggested Citation

  • T. William Lester & Nichola Lowe & Allan Freyer, 2012. "An Analysis of Risk-Taking Behavior for Public Defined Benefit Pension Plans," Upjohn Working Papers and Journal Articles 12-184, W.E. Upjohn Institute for Employment Research.
  • Handle: RePEc:upj:weupjo:12-184

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    More about this item


    Incentives; mediation; employment impacts; firm retention; recruitment;

    JEL classification:

    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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