Do Low-Income Workers Benefit from 401(k) Plans?

Eric Toder and Karen Smith ()

Working Papers, Center for Retirement Research at Boston College from Center for Retirement Research

Abstract: Economists frequently assume that employees "pay for" employer-provided fringe benefits, such as contributions to retirement plans, in the form of reduced wages. Because low-income employees receive little tax benefit from saving in qualified retirement plans, however, and may prefer immediate consumption to additional retirement accruals, they may not be willing to accept a one dollar reduction in their wage in return for an additional dollar contributed to their 401(k) plan, while high income workes may be willing to give up more than a dollar in wages to get the tax benefit.

Pages: 45 pages
Date: 2011-09, Revised 2011-09
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Working Paper: Do Low-Income Workers Benefit From 401(k) Plans? (2011)
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