Pensions have played a key role in the transformation of the way workers are paid in the
US labor market This paper reviews and synthesizes what is known about the fonn and function
of employer-provided pensions, and identifies areas where further information is most needed. for
increasing our understanding of behavior and for guiding the pension policies of the next decade.
There are a number of studies which explore the tax advantages of pensions. the special value of
pension annuities and related insurance, and the value of pensions to the firm in regulating
retirement, mobility and productivity. This paper investigates whether available evidence is
consistent with behavioral models, highlights remaining questions, and attempts to determine what
types of data would be most helpful in furthering our understanding of pension plans in the labor
Available evidence indicates that pensions must be viewed as part of a long-term
employment relation. For this reason, researchers must move beyond descriptive studies toward
structural models which permit tests between diverse pension theories. Studies of this kind have
heavy data requirements. Specifically, we believe there is a pressing need for a nationally
representative survey where the unit ofobservation is the firm, the establishment, or the pension
plan. To understand the pension-wage and the pension-turnover/retirement relationship, more
information is required on the processes determining compensation and employment Combining
information on employee characteristics, turnover and retirement patterns, company inputs and
outputs, and the firm's overall financial characteristics would go a long way toward helping
researchers distinguish among the leading explanations for why firms offer pensions. Of even
greater utility would be longitudinal data combining company-side information with employment
and wage histories of employees.
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