[cover]

Pensions and Productivity

Stuart Dorsey, Baker University
Christopher Cornwell, University of Georgia
David Macpherson, Florida State University

(The first chapter of this book is available in PDF format.)  

Employers typically view their investment in pension plans as a means of providing retirement income for their workers. Economists, on the other hand, view pension programs as a way to increase workplace productivity. Dorsey, Cornwell and Macpherson explore the theoretical and empirical basis for this perspective and, in the process, offer a complete and up-to-date discussion on the productivity theory of pensions.

They begin with a historical review of private pension practices and government policies related to pensions, including tax rules and regulations. Also shown are the penalties to workers leaving jobs covered by defined-benefit pension plans, and the retirement incentives created by defined-benefit plans. The authors also discuss the relationship between defined-contribution plans and productivity.

Next, the authors review employment models in which specific training and monitoring costs generate job-specific productivity gains. Included is a discussion of how mechanisms to discourage early quitting or late retirement help enforce long-term employment contracts. Pension incentives are compared with ideal solutions.

Dorsey, Cornwell, and Macpherson review a number of empirical studies which test the pension-productivity hypothesis, then present new estimates of productivity gains for firms sponsoring defined-benefit plans. They ask, "Is the growing market share of defined-contribution plans, at the expense of defined-benefit plans, evidence that productivity gains from defined-benefit plans are diminishing?" The authors also present new empirical evidence which suggests a link between pension incentives and employee training.
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    • 148 pp. 1998
    $40 cloth ISBN 0-88099-186-0 / ISBN-13 978-0-88099-186-5
    $16 paper ISBN 0-88099-185-2 / ISBN-13 978-0-88099-185-8.
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