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Pensions and Deferred Befefits as Strategic Compensation
Author(s) -
LAZEAR EDWARD P.
Publication year - 1990
Publication title -
industrial relations: a journal of economy and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.61
H-Index - 57
eISSN - 1468-232X
pISSN - 0019-8676
DOI - 10.1111/j.1468-232x.1990.tb00754.x
Subject(s) - vesting , severance , pension , accrual , incentive , valuation (finance) , compensation (psychology) , labour economics , economics , executive compensation , business , work (physics) , actuarial science , accounting , finance , microeconomics , earnings , mechanical engineering , art , psychology , psychoanalysis , engineering , visual arts
This paper examines labor‐oriented aspects of pensions and deferred benefits. Recent work has embedded pensions in the framework of optimal compensation schemes that induce workers to behave in certain ways. Most pension formaulas present workers with securities that look like optioons the tendency for turnover rates to fall as vesting approaches, even though there has been no change in the naive valuation of pension accrual. The paper also discusses the use of pensions as severance pay and notes that the various pension formaulas have different incentive effects.