Earnings Volatility and 401(k) Contributions

Teresa GhilarducciJoelle Saad-LesslerGayle Reznik
Written By SCEPA

RELAB WORKING PAPER

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This paper finds that negative economic shocks cause 401(k) contribution behavior to react in ways consistent with reactions to fear and past trauma.

If employees participating in 401(k) plans did not experience real earnings declines or unemployment spells between 2009 and 2012, then their contribution rates would have been 5% higher and each person would have contributed US $193 more toward their defined contribution plan accounts.

SCEPA
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