Complementarity of Pensions and Training under Multiemployer Plans

Teresa Ghilarducci and Michael Reich

Journal of Labor Research, 2001, vol. 22, issue 3, 615-634

Abstract: We compare firm-optimizing and institutional models of labor contracts to investigate how different types of pension plans affect employee training. Unlike previous studies, we consider an expanded voice model of training and pension coverage in which worker and union preferences feed back on firm decisions, and we test for this bidirectional causality between pensions and training. A standard view is that firms provide pensions to optimize their training costs. However, when pension coverage is treated as endogenous in a two-stage least squares regression (the data are merged 1991 CPS samples), pensions have a negative effect on training. In contrast, when the pension is a defined-benefit, multiemployer plan, training and pensions are complements, consistent with both optimizing and institutional models.

Date: 2001
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