Retiree Health Benefits as Deferred Compensation

James Marton and Stephen Woodbury

Public Finance Review, 2013, vol. 41, issue 1, 64-91

Abstract: Are early retiree health benefits (RHBs) a form of deferred compensation binding workers to an employer? Most employers who offer RHBs offer them only to workers who have ten or more years of tenure and have reached age fifty-five. Accordingly, workers in firms offering RHBs have an incentive to stay with a firm in the years before they attain eligibility for RHBs, and a greater incentive than otherwise to retire thereafter. The authors test for such a pattern of incentives by examining the age-specific relationship between workers’ eligibility for RHBs and retirement. The findings suggest that workers in RHB-offering firms are less likely to retire at ages fifty and fifty-one than similar RHB-ineligible workers. Also, RHB-eligible workers aged sixty and sixty-one are more likely to retire than similar RHB-ineligible workers. These results are consistent with RHBs acting as part of a delayed payment contract of the kind described by Lazear.

Keywords: compensation methods; deferred compensation; employee benefits; health insurance; retirement; tax subsidies (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/1091142112449375 (text/html)

Related works:
Working Paper: Retiree Health Benefits as Deferred Compensation: Evidence from the Health and Retirement Study (2012)
Working Paper: The Influence of Retiree Health Benefits on Retirement Patterns (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:41:y:2013:i:1:p:64-91

DOI: 10.1177/1091142112449375

Access Statistics for this article

More articles in Public Finance Review
Bibliographic data for series maintained by SAGE Publications ().