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Searching for Better Prospects: Endogenizing Falling Job Tenure and Private Pension Coverage

Author

Listed:
  • 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.

Suggested Citation

  • Leora Friedberg & Michael T. Owyang & Tara M. Sinclair, 2005. "Searching for Better Prospects: Endogenizing Falling Job Tenure and Private Pension Coverage," NBER Working Papers 11808, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:11808
    Note: AG LS
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    References listed on IDEAS

    as
    1. David Neumark, 2000. "Changes in Job Stability and Job Security: A Collective Effort to Untangle, Reconcile, and Interpret the Evidence," NBER Working Papers 7472, National Bureau of Economic Research, Inc.
    2. Leora Friedberg & Michael T. Owyang, 2004. "Explaining the evolution of pension structure and job tenure," Working Papers 2002-022, Federal Reserve Bank of St. Louis.
    3. Jeffrey Pontiff & Andrei Shleifer & Michael S. Weisbach, 1990. "Reversions of Excess Pension Assets after Takeovers," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 600-613, Winter.
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    5. Christopher A. Pissarides, 1994. "Search Unemployment with On-the-job Search," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 457-475.
    6. Bansak, Cynthia A & Raphael, Steven, 1998. "Have Employment Relationships in the United States Become Less Stable?," University of California at San Diego, Economics Working Paper Series qt7d04m8jx, Department of Economics, UC San Diego.
    7. Edward P. Lazear, 1983. "Pensions as Severance Pay," NBER Chapters, in: Financial Aspects of the United States Pension System, pages 57-90, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Rauh, Joshua D. & Stefanescu, Irina & Zeldes, Stephen P., 2020. "Cost saving and the freezing of corporate pension plans," Journal of Public Economics, Elsevier, vol. 188(C).
    2. Ashok Thomas & Luca Spataro, 2013. "Pension funds and Market Efficiency: A review," Discussion Papers 2013/164, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    3. Leora Friedberg & Michael Owyang, 2004. "Explaining the Evolution of Pension Structure and Job Tenure," NBER Working Papers 10714, National Bureau of Economic Research, Inc.
    4. Joshua Rauh & Irina Stefanescu & Stephen Zeldes, 2013. "Cost shifting and the freezing of corporate pension plans," Finance and Economics Discussion Series 2013-82, Board of Governors of the Federal Reserve System (U.S.).
    5. Joshua D. Rauh & Irina Stefanescu & Stephen P. Zeldes, 2020. "Cost Saving and the Freezing of Corporate Pension Plans," NBER Working Papers 27251, National Bureau of Economic Research, Inc.
    6. Vafeas, Nikos & Vlittis, Adamos, 2018. "Independent directors and defined benefit pension plan freezes," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 505-518.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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