American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
An Equilibrium Theory of Retirement Plan Design
American Economic Journal: Economic Policy
(pp. 22–45)
Abstract
We develop an equilibrium theory of employer-sponsored retirement plan design using a behavioral contract theory approach. The operation of the labor market results in retirement plans that generally cater to, rather than correct, workers' mistakes. Our theory provides new explanations for a range of facts about retirement plan design, including the use of employer matching contributions and the use of default contribution rates in automatic enrollment plans that lower many workers' savings. We provide novel evidence for our theory from a sample of plans.Citation
Bubb, Ryan, and Patrick L. Warren. 2020. "An Equilibrium Theory of Retirement Plan Design." American Economic Journal: Economic Policy 12 (2): 22–45. DOI: 10.1257/pol.20180605Additional Materials
JEL Classification
- D86 Economics of Contract: Theory
- G51 Household Saving, Borrowing, Debt, and Wealth
- J26 Retirement; Retirement Policies
- J32 Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
- J41 Labor Contracts