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The Effects of Employer Matching in 401(k) Plans

Year: 2005

Type: article

Abstract: This paper uses data from the April 1993 pension supplements to the Current Population Survey (CPS) to investigate the impact of employer matching and employee tenure on participation levels in 401(k) plans. While earlier studies examine similar issues, this study makes several advances. First, consistent with the theory that employers may use matching contributions to satisfy nondiscrimination rules, the study shows that correcting for the endogeneity of employer matching substantially increases the estimated effect of matching on participation levels. Second, the study provides evidence that the large positive association between employee tenure and 401(k) participation is because “stayers” tend to be “savers.”

Source: Industrial Relations A Journal of Economy and Society

DOI: 10.1111/j.0019-8676.2005.00399.x

Authors: WILLIAM E. EVEN, DAVID A. MACPHERSON

Institutions: IZA - Institute of Labor Economics, Miami University, Florida State University, Trinity University

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

OpenAlex ID: W2078846266

FWCI: 12.51

Cites: 21

Cited by: 37

Related to: 10