Working Paper: NBER ID: w9999
Authors: Leora Friedberg; Anthony Webb
Abstract: Defined benefit pension plans have become considerably less common since the early 1980s, while defined contribution plans have spread. Previous research showed that defined benefit plans, with sharp incentives encouraging retirement after a certain point, contributed to the striking postwar decline in American retirement ages. In this paper we find that the absence of age-related incentives in defined contribution plans leads workers to retire almost two years later on average, compared to workers with defined benefit plans. Thus, the evolution of pension structure can help explain recent increases in employment among people in their 60s, after decades of decline.
Keywords: No keywords provided
JEL Codes: J14; J26; J32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Defined Benefit (DB) plans (J32) | earlier retirement (J26) |
| Defined Contribution (DC) plans (J32) | later retirement (J26) |
| Pension wealth accrual (H55) | retirement decisions (J26) |
| Shift in pension structure (H55) | rise in median retirement age (J26) |
| Defined Benefit (DB) plans (J32) | pension wealth accrual encourages later retirement (J26) |