Employee Mobility and Employer-Provided Retirement Plans

51 Pages Posted: 27 Aug 2013

See all articles by Gopi Shah Goda

Gopi Shah Goda

Stanford University

Damon Jones

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies

Colleen Flaherty Manchester

University of Minnesota

Date Written: October 2012

Abstract

This paper provides new insights into the effect of the widespread transition from defined benefit (DB) to defined contribution (DC) pension plans on employee mobility. Pension plans may affect employee mobility both through an “incentive effect,” where the bundle of benefit characteristics, such as vesting rules, relative liquidity and the risk/return tradeoff affect turnover directly, and a “selection effect,” where employees with different underlying mobility tendencies select into firms with different types of pension plans. In this paper, we quantify the role of selection by exploiting a natural experiment at a single employer in which an employee’s probability of transitioning from a DB to a DC plan was exogenously affected by the default provisions of the transition. Using a differences-in-regression-discontinuities (DRD) estimator, we find evidence that employees with higher mobility tendencies self-select into the DC plan. Furthermore, we find a negative direct effect of DC enrollment on turnover that takes place within one year. Our results suggest that selection likely contributes to an observed positive relationship between the transition from DB to DC plans and employee mobility in settings where employees choose plans or employers.

Suggested Citation

Goda, Gopi Shah and Jones, Damon and Manchester, Colleen Flaherty, Employee Mobility and Employer-Provided Retirement Plans (October 2012). Available at SSRN: https://ssrn.com/abstract=2316823 or http://dx.doi.org/10.2139/ssrn.2316823

Gopi Shah Goda (Contact Author)

Stanford University ( email )

SIEPR
366 Galvez St.
Stanford, CA 94305
United States
6507360480 (Phone)

Damon Jones

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies ( email )

1155 East 60th Street
Chicago, IL 60637
United States

Colleen Flaherty Manchester

University of Minnesota ( email )

3-300R CarlSMgmt
Minneapolis, MN 55455
United States
612 625-9667 (Phone)

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