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Company Pension Plans, Stock Market Returns, and Labor Demand

Author

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  • Ms. Enrica Detragiache

Abstract

With asset values falling sharply in recent years, many companies around the world are under pressure to restore the solvency of their defined-benefit pension plans. Will this lead to higher contributions? Will higher contributions increase labor costs and reduce employment? Does this mechanism exacerbate economic downturns? What are the economic effects of pension fund regulation? This paper develops a theoretical model to address these questions. Although its scope is more general, the model captures the main institutional features of the pension system in the Netherlands, a country where the economic effects of the pension shock are widely debated.

Suggested Citation

  • Ms. Enrica Detragiache, 2003. "Company Pension Plans, Stock Market Returns, and Labor Demand," IMF Working Papers 2003/222, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2003/222
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    References listed on IDEAS

    as
    1. Bodie, Zvi, 1990. "Pensions as Retirement Income Insurance," Journal of Economic Literature, American Economic Association, vol. 28(1), pages 28-49, March.
    2. Julia Lynn Coronado & Steven A. Sharpe, 2003. "Did Pension Plan Accounting Contribute to a Stock Market Bubble?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(1), pages 323-371.
    3. Alan L. Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, 1993. "The Role of Pensions in the Labor Market," NBER Working Papers 4295, National Bureau of Economic Research, Inc.
    4. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, December.
    5. David Carey, 2002. "Coping with Population Ageing in the Netherlands," OECD Economics Department Working Papers 325, OECD Publishing.
    6. Jeroen J. M. Kremers, 2002. "Pension Reform: Issues in the Netherlands," NBER Chapters, in: Social Security Pension Reform in Europe, pages 291-316, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Philip Bunn & Kamakshya Trivedi, 2005. "Corporate expenditures and pension contributions: evidence from UK company accounts," Bank of England working papers 276, Bank of England.

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