Evaluating pension portability reforms. the tax reform act of 1986 as a natural experiment.

Abstract

This paper uses the Tax Reform Act of 1986 (TRA86) as a natural experiment to evaluate the job mobility response of prime aged US employees participating into employer sponsored defined benefit (DB) pension plans to a reduction in the vesting period for pension rights accrual. The repeated panel data design of the Survey of Income and Program Participation (SIPP) allows us to implement a "difference-in-difference" identification strategy using data from pre and post-reform periods. The effect of the policy change is identified as the difference between the change in predicted voluntary job mobility of the treated group and the change in predicted voluntary job mobility of the control group, over the period under study. We find that the reform had no significant effects on voluntary job mobility of the treated group. Our findings are robust to the use of different control groups and different pre/post reform samples.