Publication type
Journal Article
Authors
Publication date
June 1, 2011
Summary:
We solve an empirically parameterized life-cycle model of consumption and pension choices to show how expected earnings growth and risk affect the benefits of final-salary defined benefit (DB) pension plans, relative to pension plans that are defined contribution (DC) in nature. We use micro data on the pension choices of individuals to provide evidence consistent with the model predictions: (1) individuals who expect a higher growth rate of earnings are more likely to choose DB final-salary schemes, and (2) individuals who face a higher variance of persistent income shocks are less likely to choose DB final-salary schemes. We control for cohort and age fixed effects in the empirical analysis.
Published in
Journal of Risk and Insurance
Volume and page numbers
Volume: 78 , p.931 -960
DOI
http://dx.doi.org/10.1111/j.1539-6975.2011.01419.x
ISSN
224367
Subjects
Notes
Albert Sloman Library Periodicals *restricted to Univ. Essex registered users*
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