Working Paper: NBER ID: w11808
Authors: Leora Friedberg; Michael T. Owyang; Tara M. Sinclair
Abstract: Recent declines in job tenure have coincided with a shift away from traditional defined benefit (DB) pensions, which reward long tenure. Recent evidence also points to an increase in job-to-job movements by workers, and we document gains in relative wages of job-to-job movers over a similar period. We develop a search model in which firms may offer tenure-based contracts like DB pensions to reduce the incidence of costly on-the-job search by workers. Reduced search costs can, under fairly general conditions, lower the value of deterring search and the use of DB pensions.
Keywords: No keywords provided
JEL Codes: J24; J32; J41; J63; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reduced search costs (D83) | lower value of deterring search (K42) |
| reduced search costs (D83) | use of defined benefit pensions (H55) |
| increased job-to-job mobility (J62) | rising relative wages of job-to-job movers (J62) |
| declining search costs (D83) | higher incidence of job changes (J63) |
| higher incidence of job changes (J63) | shorter job tenure (J63) |
| firms offering tenure-based contracts (J41) | mitigate costly on-the-job search (J68) |
| decline in effectiveness of defined benefit pensions (H55) | changing nature of job mobility and search costs (J62) |
| improved relative wages for job-to-job movers (J62) | on-the-job search has become more rewarding (J68) |