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Report
ESOP fables: the impact of employee stock ownership plans on labor disputes
By the early 1990s, employee stock ownership plans (ESOPs) had become as prevalent in unionized firms as in nonunionized firms. However, little research has been devoted to examining the implications of ESOPs for collective bargaining or, more generally, for cross ownership. In this paper, we extend the signaling model of Cramton and Tracy (1992) to allow partial ownership by the union. We demonstrate that ESOPs create incentives for unions to become weaker bargainers. As a result, the model predicts that ESOPs will lead to a reduction in strike incidence and in the fraction of labor disputes ...
Journal Article
Employer health benefits and insurance expansions: Hawaii's experience
As policies are proposed to expand health insurance coverage in the United States, it is useful to focus on the experience of Hawaii, where employers are required to offer such insurance to their full-time employees. Our findings suggest that Hawaii?s law has substantially increased health insurance coverage in the state, although the impact has been partially offset by employers' increased reliance on the exempt class of employees who work fewer than 20 hours per week.
Working Paper
401(k) matching contributions in company stock: costs and benefits for firms and workers
This paper examines why some employers provide matching contributions to 401(k) plans in company stock and explores the implications of match policy for employee retirement wealth. Unlike stock option grants to non-executives, a firm's decision to match in company stock does not appear to be strongly correlated with cash flow or with measures of the benefits of aligning incentives of employees and employers. Rather, we find evidence that firms are more likely to provide the match in company stock if firm risk is low (i.e. lower stock price volatility and lower bankruptcy risk) and employees ...
Journal Article
Covet thy neighbor’s … pension? Public vs. private
Working Paper
Income taxes, compensating differentials, and occupational choice: how taxes distort the wage-amenity decision
The link between taxes and occupational choices is central for understanding the welfare impacts of income taxes. Just as taxes distort the labor-leisure decision, they also distort the wage-amenity decision. Yet, there are no estimates of the full response on this margin. When tax rates increase, workers favor jobs with lower wages and more non-taxable amenities. We introduce a two-step methodology which uses compensating differentials to characterize the tax elasticity of occupational choice. We estimate a significant compensated elasticity of 0.05, implying that a 10% increase in the ...
Report
Sustainable social security: four options
This paper presents four policy options to make Social Security sustainable under the coming demographic shift: 1) increase payroll taxes by 6 percentage points, 2) reduce the replacement rates of the benefit formula by one-third, 3) raise the normal retirement age from sixty-six to seventy-three, or 4) means-test the benefits and reduce them one-to-one with income. While all four policies achieve the same goal, their economic outcomes differ significantly. Options 2 and 3 encourage own savings, and capital stock is more than 10 percent higher than in the other two options. The payroll tax ...
Journal Article
An actuarial balancing act
Debates over public pensions can quickly plunge into the pool of minutiae and tediousness.
Journal Article
New arguments for employer-assisted housing
In some parts of the country, innovation and experimentation have helped employer-assisted housing (EAH) programs gain momentum, providing New Englanders additional rationale for implementing these programs. This article describes how EAH works, its potential benefits, how it is being implemented around the country, and how our region can make better use of these programs to promote competitiveness and affordable housing.
Journal Article
In case of pension emergency
Legislatures nationwide will no doubt be debating what to do about public pensions with large unfunded liabilities. Discussion of two options getting considerable attention.
Journal Article
A closer look at the employment cost index
Labor costs have recently come under scrutiny by policymakers, business economists, and financial market participants. The primary concern has been that tight labor markets might lead to faster compensation growth and, ultimately, to upward pressure on general inflation. The employment cost index (ECI) has received particularly close attention because many analysts consider it to be one of the best measures of labor cost inflation. Other analysts, however, have questioned whether the ECI and other labor cost measures are useful in inflation forecasting. One reason for doubting the ECI's ...