Monday, July 20, 2015

New papers from the National Bureau of Economic Research

Does Protecting Older Workers from Discrimination Make It Harder to Get Hired?  Evidence from Disability Discrimination Laws by David Neumark, Joanne Song, Patrick Button  -  #21379 (AG LS)


We explore the effects of disability discrimination laws on hiring of older workers.  A concern with anti-discrimination laws is that they may reduce hiring by raising the cost of terminations and - in the specific case of disability discrimination laws - raising the cost of employment because of the need to accommodate disabled workers. Moreover, disability discrimination laws can affect non-disabled older workers because they are fairly likely to develop work-related disabilities, yet are not protected by these laws.  Using state variation in disability discrimination protections, we find little or no evidence that stronger disability discrimination laws lower the hiring of non-disabled older workers.  We similarly find no evidence of adverse effects of disability discrimination laws on hiring of disabled older workers.

Supplemental Plan Offerings and Retirement Saving Choices: An Analysis of North Carolina School Districts by Robert L. Clark, Emma Hanson, Melinda Sandler Morrill, Aditi Pathak  -  #21382 (AG)


Unlike private sector employers, public school districts generally offer more than one type of supplemental retirement savings plan and allow multiple vendors to offer products.  Using individual-level payroll data from over half of the public school districts in North Carolina coupled with data from an employer survey, this study examines the impact of inter-district differences in supplemental plan administration on participation in these savings vehicles.  We find wide variation in total participation rates and in 403(b) plan participation rates in particular, even among this population of public-sector workers with the same defined benefit pension plan, health plan, and retiree health coverage.  Individual and district characteristics explain some, but not all, of the variation observed.

Lessons for Public Pensions from Utah's Move to Pension Choice by Robert L. Clark, Emma Hanson, Olivia S. Mitchell  -  #21385 (AG LS PE)


We explore what happened when the state of Utah moved away from its traditional defined benefit pension.  In its place, it offered new hires a choice between a conventional defined contribution plan and a hybrid plan option, where the latter has both a guaranteed benefit component and a defined contribution plan where employees bear investment risk.  We show that around 60 percent of new hires failed to make any active choice and, as a result, were automatically defaulted into the hybrid plan.  Slightly more than half of those who made an active choice elected the hybrid plan.  Post-reform,employees who failed to actively elect a primary retirement plan were also far less likely to enroll in a supplemental retirement account, compared to new hires who actively selected a plan.  We also find that employees hired following the reform were more likely to leave public employment, resulting in higher separation rates.  This could reflect a reduction in the desirability of public employment under the new pension design and an improving economic climate in the
state. Our results imply that public pension reformers must consider employee responses in addition to potential cost savings, when developing and enacting major pension plan changes.

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