Labour Mobility, Pension Portability and the Lack of Lock-In Effects

Abstract

This paper revisits the question of whether defined benefit pension plans inhibit labour mobility. Using national register data for three distinct 3 year periods, we define and calculate a measure of changes in individual pension entitlements which we term potential portability gain. Estimation results indicate that the effect of portability gains on the propensity to change jobs is either weak or non-existent, and there are no signs of gains or losses in pension entitlements being reflected in wages for job changers. We conclude that potential portability gains or losses in occupational pensions are of negligible importance for labour market mobility.

Keywords: labour market mobility, defined benefit occupational pensions, matched employer-employee register data

JEL Classification: J26, J33, J62