Research Focus:

Labor Economics, Applied Econometrics, Applied Microeconomics, Pension Economics and Retirement.

Job Market Paper : "Evaluating the Wage-Pension Trade Off in a Dynamic Model of Search and Savings "

Abstract: Standard labor theory suggests a negative relationship between the wage and non-wage components of compensation packages. Yet, the empirical
evidence on the existence of a compensating wage differential for pension benefits has been mixed. Previous studies have often overlooked the fact that workers' wage and pension beneffts are simultaneously determined by their job choice decisions. This paper estimates a life cycle model in which individuals search for jobs, consume, save on their own and through their employer-provided pension. Job offers are wage-pension packages. The estimates suggest positive correlation between the wage and pension components of the packages that employers offer, as well as positive sorting of high-productivity, highly risk averse individuals into jobs with pensions as compared to no-pension jobs. Policy experiments show that making contributions mandatory in defined contribution plans results in lower overall pension coverage, but an increase in defined contribution balance accumulations which is higher than the drop in non-pension saving. The elimination of tax incentives on pension contributions leads to lower pension coverage and over all asset accumulations. Complete phaseout of defined benefit plans, could lead to lower overall savings for retirement.

Munnell, Alicia H., Alex Golub-Sass and Nadia Karamcheva. 2009. “Strange But True: Claim and Suspend” Issues in Brief, Center for Retirement Research, IB#9-11.

Munnell, Alicia H., Alex Golub-Sass and Nadia Karamcheva. 2009. “Strange But True: Claim Social Security Now, Claim More Later” Issues in Brief, Center for Retirement Research,IB#9-9.

Munnell, Alicia H., Alex Golub-Sass and Nadia Karamcheva. 2009. “Strange but True: Free Loan from Social Security” Issues in Brief, Center for Retirement Research, IB#9-6.

“Growing Pension Inequality: Consequences of the Pension Type Shift” (with Geoffrey Sansenbacher)

Abstract: Employer-sponsored pensions are an important source of retirement income and often make the difference between having a comfortable retirement and just scraping by. Over the past two decades pension sponsorship and participation have remained relatively constant, declining slightly only in recent years. This constancy however, masks a growing inequality in terms of pension take-up and participation among different income groups. This inequality has become more pronounced as many employers have shifted their pension sponsorship from traditional defined benefit plans to defined contribution plans. This paper focuses on three issues. The first issue is the importance of private pensions as a source of retirement income, especially among low income households. The second issue pertains to the evolution of pension sponsorship and participation rates among different income groups. In particular, we focus on the decision to participate in a defined contribution plan for low income households. Finally, we examine the reason some individuals may choose not to take up a pension and how this differs across income groups.

“Private Pensions: Compensating Wage Differentials”