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Determinants and Effects of Employer Matching Contributions in 401(k) Plans

  • William E. Even

    (Miami University)

  • David A. Macpherson

    (Florida State University)

This paper uses data from the April 1993 Pension Supplements to the Current Population Survey to investigate the impact of employer matching and employee tenure on participation levels in 401(k) plans. While earlier studies examine similar issues, this study makes several advances. First, consistent with the theory that employers may use matching contributions to satisfy nondiscrimination rules, the study shows that correcting for the endogeneity of employer matching substantially increases the estimated effect of matching on participation levels. Second, the study provides evidence that the large positive association between employee tenure and 401(k) participation is because 'stayers' tend to be 'savers'.

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File URL: http://econwpa.repec.org/eps/lab/papers/0405/0405001.pdf
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Paper provided by EconWPA in its series Labor and Demography with number 0405001.

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Length: 33 pages
Date of creation: 03 May 2004
Date of revision:
Handle: RePEc:wpa:wuwpla:0405001
Note: Type of Document - pdf; pages: 33
Contact details of provider: Web page: http://econwpa.repec.org

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