The Relationship between Job Characteristics and Retirement Savings in Defined Contribution Plans During the 2007-2009 Recession

Abstract

Pension trends in the United States, marked by the movement toward defined contribution (DC) plans, raise questions about the individual characteristics that influence retirement saving behavior. This study examines how DC participants’ industry and employer characteristics relate to the prevalence of reduced retirement account contributions in a time of severe recession (2007-2009). Data come from a restricted-use file that matches workers in the 2008 Survey of Income and Program Participation (SIPP) to their W-2 tax records received by the Social Security Administration. Multivariate probit models indicate several job-related factors, most notably a decline in real earnings, were linked to declines in participants’ contributions to defined contribution retirement plans during the recession of 2007–2009; employer size, occupation, and industry-specific employment losses, among other characteristics, were also associated with changes in retirement plan contributions.

Keywords: Pensions, Retirement, Income

JEL Classification: J32, J38