Working Paper: NBER ID: w3688
Authors: Steven C. Allen; Robert L. Clark; Ann A. McDermed
Abstract: A well-known, if underappreciated, finding in the mobility literature is that turnover is much lower in jobs covered by pensions than in other jobs. This could result from capital losses for job changes created by most benefit formulas, the tendency of turnover-prone individuals to avoid jobs covered by pensions, or higher overall compensation levels in such jobs. A switching bivariate probit model of pension coverage and turnover is developed to estimate the effect of each of these factors. The results show that capital losses are the main factor responsible for lower turnover in jobs covered by pensions, but self-selection and compensation levels also play an important role. This is the first direct evidence that bonding is important for understanding long-term employment relationships.
Keywords: pensions; job turnover; labor market mobility
JEL Codes: J32; J41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| capital losses (G32) | lower turnover rates (J63) |
| pension coverage (H55) | job duration (C41) |
| self-selection (C52) | seeking jobs with pensions (J32) |
| higher compensation levels (J31) | lower turnover (M51) |
| bonding (G24) | job retention (J63) |
| bonding (G24) | screening out workers likely to quit (J63) |