Are Firms or Workers Behind the Shift Away from Db Pension Plan?

33 Pages Posted: 6 May 2005

See all articles by Stephanie Aaronson

Stephanie Aaronson

Board of Governors of the Federal Reserve System

Julia Lynn Coronado

Federal Reserve Board - Division of Research and Statistics

Date Written: April 2005

Abstract

One of the most striking changes in the composition of household retirement savings over the past 20 years has been the shift from defined benefit to defined contribution pension plans. Understanding the factors underlying this shift is important for determining its impact on retirement saving adequacy. Yet previous research, which has mostly focused on factors affecting all firms, such as regulation or increased longevity, has yielded little consensus. In this study we estimate the contribution of changing workforce characteristics and production environments to the shift in pension coverage. Our findings suggest that, while aggregate factors explain a large part of the movement, changes in worker demand, due to evolving workforce characteristics, also contributed notably. On the supply side, we find support for the theory that technical change has reduced the value of DB plans. These supply and demand factors are particularly important for explaining the significant variation in cross-industry trends in pension coverage.

Keywords: Pensions, compensation, workforce trends, job turnover, technical change

JEL Classification: J32, J41, J26

Suggested Citation

Aaronson, Stephanie R. and Coronado, Julia Lynn, Are Firms or Workers Behind the Shift Away from Db Pension Plan? (April 2005). Available at SSRN: https://ssrn.com/abstract=716383 or http://dx.doi.org/10.2139/ssrn.716383

Stephanie R. Aaronson (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Julia Lynn Coronado

Federal Reserve Board - Division of Research and Statistics ( email )

Washington, DC 20551
United States
202-452-3044 (Phone)
202-872-4927 (Fax)

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