Job Tenure and Pension Coverage

Abstract

Commentators constantly cite an increase in labor mobility as a major reason for the shift in the private sector from defined benefit to defined contribution plans. But while most casual observers accept such a phenomenon, economists have been hard pressed to find any significant change over time. Only in recent years have the data indicated that mobility might have increased for some groups. This pattern suggests that the advent of 401(k) plans led to an increase in mobility rather than an increase in mobility leading to the proliferation of 401(k)s. This paper attempts to sort out this “chicken and egg” issue using data from the Current Population Survey (CPS) and the 1984 through 2001 panels of the Survey of Income and Program Participation (SIPP).