Pension Portability and Labor Mobility:  Evidence From the Survey of Income and Program Participation

Gustman, Alan L.; Steinmeier, Thomas L.

doi:10.3386/w3525

Cited by 62 publications

(91 citation statements)

References 12 publications

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“…If employees find these features desirable, DC plans may actually increase retention. In fact, studies have found that, similar to DB plans, workers in DC plans have lower mobility relative to uncovered workers (Gustman and Steinmeier, 1993;Andrietti and Hilderband, 2004). While uncovered workers are not the relevant comparison when evaluating the effect of plan type on mobility, this finding does question conventional wisdom that only DB-plan features reduce mobility.…”

Section: Introductionmentioning

confidence: 98%

Retirement Plan Type and Employee Mobility: The Role of Selection and Incentive Effects

Goda

Jones

Manchester

2013

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Employer-provided pension plans may affect employee mobility both through an "incentive effect," where the bundle of benefit characteristics such as vesting rules, pension wealth accrual, risk, and liquidity affect turnover directly, and a "selection effect," where employees with different underlying mobility tendencies select across plans or across firms with different types of plans. In this paper, we quantify the role of selection by exploiting a natural experiment at a single employer in which an employee's probability of transitioning from a defined benefit (DB) to a defined contribution (DC) pension plan was exogenously affected by default rules. Using regression discontinuity as well as differences-in-regression-discontinuities (DRD) methods, we find evidence that employees with higher mobility tendencies self-select into the DC plan. Our results suggest that selection likely contributes to the observed positive relationship between the transition from DB to DC plans and employee mobility in settings where employees sort into plans or employers. Counter to conventional wisdom, we find a negative direct effect of the DC plan on turnover relative to the DB plan, which underscores the multi-dimensional difference between these plans.

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Section: Introductionmentioning

confidence: 98%

Retirement Plan Type and Employee Mobility: The Role of Selection and Incentive Effects

Goda

Jones

Manchester

2013

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“…It should be stressed that mobility per se does not necessarily have a negative effect on pensions, as for example workers may go from a lowpay job to a high-pay job hence increasing their pension levels. It is the existence of distortions in the pension rules (such as lack of portability) which might create these losses in association with mobility (Gustman and Steinmeier, 1993). Moreover, even when pension benefits are fully portable, pension income may vary depending on whether job turnover is associated to job-to-job transition or to transition from job to long unemployment spells.…”

Section: Job Turnovermentioning

confidence: 99%

Labour Mobility and Retirement

Brugiavini

Padula

Pasini

et al. 2011

The Individual and the Welfare State

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Public and private pensions represent the main income source of Europeans in their old age. Pension provisions depend on workers’ career: workers retiring under the same pension regime might receive very different pension benefits depending on the time pattern of employment and unemployment spells, on the magnitude and the timing of income shocks and, more generally, on the age-profile of earnings (Boeri and Brugiavini 2009). Individuals are often induced to retire early, but inadequate contributions due to a short work history may reduce household’s welfare later in life (Angelini et al. 2009). Previous work has shown great variability in the patterns of transition from work to retirement (Peracchi and Welch 1994; Brugiavini and Peracchi 2005; Brugiavini et al.

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“…Gustman & Steinmeier (1990) indicate that turnover rates are lower in jobs providing pensions because total compensation is substantially higher in these positions. Similarly, Ellwood (1985) shows that pension coverage is -6-situation, late entrants are likely to retire after their counterparts starting in pension employment at younger ages.…”

Section: Pension Coverage and Retirement Agesmentioning

confidence: 99%

“…First, departures from covered jobs may be followed by subsequent full or part-time work, rather than immediate retirement, thus moderating the effects of the pension incentives.5 second, the incentives to leave the firm prior to normal retirement ages are likely to be limited to persons entering the pension plan at relatively young ages, since vesting provisions and length-of-service requirements often discourage early departures for persons beginning pensioncovered employment later in life.6 Third, even for persons entering covered employment at relatively young ages, defined benefit plans are likely to discourage mobility prior to the age at which actuarial benefits are maximized (Allen et. al., 1993;Gustman & Steinmeier, 1990), reducing the probability of early, as well as late, retirement.7…”

mentioning

confidence: 99%

Do pensions increase the labor supply of older men?

Ruhm

1996

Journal of Public Economics

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Pension Portability and Labor Mobility: Evidence From the Survey of Income and Program Participation

Cited by 62 publications

References 12 publications

Retirement Plan Type and Employee Mobility: The Role of Selection and Incentive Effects

Retirement Plan Type and Employee Mobility: The Role of Selection and Incentive Effects

Labour Mobility and Retirement

Do pensions increase the labor supply of older men?

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