NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Severance Pay, Pensions, and Efficient Mobility

Edward P. Lazear

NBER Working Paper No. 854
Issued in February 1982
NBER Program(s):   LS   PE

This paper argues that pensions are used as severance pay devices in an efficient compensation scheme. The major points of the study are: (1) Severance pay, which takes the form of higher pension values for early retirement, is widespread. (2) A major reason for the existence of pensions is the desire to provide an incentive mechanism that can also function as an efficient severance pay device. It is incorrect to think of pensions merely as a tax-deferred savings account. (3) The wage rates that older workers receive exceed their marginal products. This is evidenced by the fact that employers are willing to buy them out with higher pensions if they retire early. These conclusions are based upon examination of a data set which was generated as part of this study. That data set contains detailed information on 244 of the largest pension plans in the country, covering about 8 million workers.

download in pdf format
   (320 K)

download in djvu format
   (243 K)

email paper

This paper is available as PDF (320 K) or DjVu (243 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w0854

Published: Edward P. Lazear, 1983. "Pensions as Severance Pay," NBER Chapters, in: Financial Aspects of the United States Pension System, pages 57-90 National Bureau of Economic Research, Inc.

Users who downloaded this paper also downloaded these:
Lazear Pensions as Severance Pay
Lazear w0944 Pensions as Severance Pay
Lazear and Oyer w10192 Internal and External Labor Markets: A Personnel Economics Approach
Lazear Incentive Effects of Pensions
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us