Do Low-Income Workers Benefit from 401(K) Plans?
Center for Retirement Research at Boston College Working Paper No. 2011-14
46 Pages Posted: 3 Oct 2011
Date Written: September 30, 2011
Economists frequently assume that employees “pay for” employer-provided fringe benefits, such as contributions to retirement plans, in the form of reduced wages. Because low-income employees receive little tax benefit from saving in qualified retirement plans, however, and may prefer immediate consumption to additional retirement accruals, they may not be willing to accept a one dollar reduction in their wage in return for an additional dollar contributed to their 401(k) plan, while high income workers may be willing to give up more than a dollar in wages to get the tax benefit.
Keywords: economists, employer, fringe benefits, retirement, wages, low-income
JEL Classification: J26
Suggested Citation: Suggested Citation