Company Pension Plans, Stock Market Returns, and Labor Demand
19 Pages Posted: 14 Feb 2006
Date Written: November 2003
With asset values falling sharply in recent years, many companies around the world are under pressure to restore the solvency of their defined-benefit pension plans. Will this lead to higher contributions? Will higher contributions increase labor costs and reduce employment? Does this mechanism exacerbate economic downturns? What are the economic effects of pension fund regulation? This paper develops a theoretical model to address these questions. Although its scope is more general, the model captures the main institutional features of the pension system in the Netherlands, a country where the economic effects of the pension shock are widely debated.
Keywords: Company pension plans, labor demand, pension regulation, Netherlands
JEL Classification: J26, G28, G23
Suggested Citation: Suggested Citation