Are Male/Female Earnings Differentials Related to Life-Expectancy-Caused Pension Cost Differences?

Robert L Moore

Economic Inquiry, 1987, vol. 25, issue 3, 389-401

Abstract: This paper argues that employers using defined-benefit pension plans are forced by competitive conditions to lower females' earnings to account for more costly pension liabilities resulting from longer life expectancy. A newly constructed data set containing employee salary histories and pension plan descriptions from five firms is used to calculate how much more it costs to employ a female versus a male worker, identical except for life expectancy. It is demonstrated that each dollar of increased pension liabilities results in a reduction in females' salaries by fifty-five cents. Implications of these findings for the 1983 Supreme Court ruling involving sex-linked pension benefits are discussed. Copyright 1987 by Oxford University Press.

Date: 1987
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