Worker Valuation of Retirement Benefits

118 Pages Posted: 26 Jul 2023 Last revised: 27 Mar 2024

See all articles by Allison Cole

Allison Cole

NBER ; ASU W.P. Carey School of Business

Bledi Taska


Date Written: July 21, 2023


On average across firms and workers, compensation paid as employer contributions
to 401(k) plans has double the effect on a firm’s recruiting success as wages, primarily due to higher-income and higher-age occupations. The result is based on quasi-exogenous variation in wages and benefits driven by IRS non-discrimination testing of retirement plans and national wage setting. We confirm the high valuation of retirement benefits in a survey experiment: participants value retirement to wage dollars at a ratio of 1.6 to one. On-the-job search model estimates imply that 80 percent of firms in-sample could improve their recruiting outcomes by increasing 401(k) contributions.

Keywords: Labor and Finance, Retirement, Compensating Differentials

JEL Classification: J01, J32, D14

Suggested Citation

Cole, Allison and Taska, Bledi, Worker Valuation of Retirement Benefits (July 21, 2023). Available at SSRN: or

Allison Cole (Contact Author)

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

ASU W.P. Carey School of Business ( email )

PO Box 873906
Tempe, AZ 85287-3906
United States

Bledi Taska

Lightcast ( email )

Boston, MA 02110
United States

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