Working Paper: NBER ID: w2266
Authors: Steven G. Allen; Robert L. Clark
Abstract: This paper examines how pension plans affect employee behavior and firm performance. Theoretically, the impact of pensions on firm performance cannot be predicted. Firms with pensions should have lower turnover rates and more efficient retirement decisions; their employees will be less likely to shirk. On the other hand, pension compensation is not very closely linked to worker performance and there is some risk that turnover may fall too much. The evidence indicates that although wages do not seem to fall with pension compensation, profit rates are not affected by pension coverage. This suggests that pension coverage is associated with higher productivity, a proposition that is supported by indirect evidence on pensions, turnover, and productivity but not by direct tests of how pension coverage and productivity are correlated.
Keywords: pensions; firm performance; employee behavior; labor economics
JEL Codes: J32; J33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| pensions (H55) | lower turnover rates (J63) |
| pensions (H55) | more efficient retirement decisions (J26) |
| pensions (H55) | higher productivity (O49) |
| lower turnover rates (J63) | enhanced job stability (J29) |
| pensions (H55) | worker performance (J29) |