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Evaluating Pension Portability Reforms: The Tax Reform Act of 1986 as a Natural Experiment

Author

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  • Vincenzo Andrietti
  • Vincent A. Hildebrand
Abstract
This paper uses the Tax Reform Act of 1986 as a natural experiment to evaluate the job mobility response of prime-aged US employees participating in employer sponsored defined benefit pension plans to a reduction in the vesting period for pension rights accrual. We apply difference-in-differences methods using data from the Survey of Income and Program Participation to estimate the treatment impact of this policy change. We find that on average the reform had no significant effects on voluntary job mobility of the treated group. Our findings are robust to the use of different control groups and difference-in-differences estimators.

Suggested Citation

  • Vincenzo Andrietti & Vincent A. Hildebrand, 2006. "Evaluating Pension Portability Reforms: The Tax Reform Act of 1986 as a Natural Experiment," Social and Economic Dimensions of an Aging Population Research Papers 160, McMaster University.
    • Handle: RePEc:mcm:sedapp:160
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    References listed on IDEAS

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    1. Vincenzo Andrietti & Vincent Hildebrand, 2001. "Pension Portability and Labour Mobility in the United States. New Evidence from the SIPP Data," CeRP Working Papers 10, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    2. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    3. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(4), pages 605-654.
    4. Wise, David A., 1985. "Pensions, Labor, and Individual Choice," National Bureau of Economic Research Books, University of Chicago Press, number 9780226902937.
    5. Gustman, Alan L. & Steinmeier, Thomas L., 1993. "Pension portability and labor mobility : Evidence from the survey of income and program participation," Journal of Public Economics, Elsevier, vol. 50(3), pages 299-323, March.
    6. Steven G. Allen & Robert L. Clark & Ann A. McDermed, 1993. "Pensions, Bonding, and Lifetime Jobs," Journal of Human Resources, University of Wisconsin Press, vol. 28(3), pages 463-481.
    7. Thomas C. Buchmueller & Robert G. Valletta, 1996. "The Effects of Employer-Provided Health Insurance on Worker Mobility," ILR Review, Cornell University, ILR School, vol. 49(3), pages 439-455, April.
    8. Laurence J. Kotlikoff & David A. Wise, 1985. "Labor Compensation and the Structure of Private Pension Plans: Evidence for Contractual versus Spot Labor Markets," NBER Chapters, in: Pensions, Labor, and Individual Choice, pages 55-88, National Bureau of Economic Research, Inc.
    9. Brigitte C. Madrian, 1994. "Employment-Based Health Insurance and Job Mobility: Is there Evidence of Job-Lock?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(1), pages 27-54.
    10. Olivia S. Mitchell, 1983. "Fringe Benefits and the Cost of Changing Jobs," ILR Review, Cornell University, ILR School, vol. 37(1), pages 70-78, October.
    11. David A. Wise, 1985. "Pensions, Labor, and Individual Choice," NBER Books, National Bureau of Economic Research, Inc, number wise85-1.
    12. Meyer, Bruce D, 1995. "Natural and Quasi-experiments in Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 151-161, April.
    13. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
    14. Steven G. Allen & Robert L. Clark & Ann A. McDermed, 1988. "Why Do Pensions Reduce Mobility?," NBER Working Papers 2509, National Bureau of Economic Research, Inc.
    15. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
    16. Laurence J. Kotlikoff & Daniel E. Smith, 1983. "Pensions in the American Economy," NBER Books, National Bureau of Economic Research, Inc, number kotl83-1.
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    Cited by:

    1. Lammers, Marloes & Bloemen, Hans & Hochguertel, Stefan, 2017. "Pension Rules and Labour Market Mobility," IZA Discussion Papers 10840, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Labour mobility; employer-provided pension plans; vesting; program evaluation; propensity score matching;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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