TY  - JOUR
AU  - Friedberg,Leora
AU  - Owyang,Michael
TI  - Explaining the Evolution of Pension Structure and Job Tenure
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10714
PY  - 2004
Y2  - August 2004
UR  - http://www.nber.org/papers/w10714
L1  - http://www.nber.org/papers/w10714.pdf
N1  - Author contact info:
Leora Friedberg
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville, VA 22904-4182
Tel: 434/924-3225
Fax: 434/982-2904
E-Mail: lfriedbe@nber.org

Michael Owyang
Research Department
Federal Reserve Bank of St. Louis
P.O. Box 442
St. Louis, MO 63166-0442
E-Mail: Michael.T.Owyang@stls.frb.org
AB  - Current and expected job tenure have fallen significantly over the last two decades. Over the same period, traditional defined benefit pensions, designed to reward long tenure, have become steadily less common. This paper uses a contract-theoretic matching model with moral hazard to explain changes in pension structure and job tenure. In our model, a decline in the value of existing jobs relative to new jobs reduces expected match duration and thus the appeal of DB pensions. We show that this explanation is consistent with observed trends and suggests an additional consequence of technological change that has not been closely studied.
ER  -