The Impact of Human Capital Investments on Pension Benefits

by Richard Johnson

Purchase Print Copy

 FormatList Price
Add to Cart Paperback40 pages Free

This paper develops a model, with deferred compensation and severance pay, which predicts that workers bear all the costs and receive all the returns of human capital investments, and that specific investments yield higher returns than more general investments. The model also predicts that pensions, which provide an efficient means of deferring compensation, will be positively related to specific human capital investments. Evidence from the NLS of Mature Men confirm these predictions; participation in company-sponsored training programs, which proxies for specific investments, increases the probability of pension receipt and the level of benefits received. More general training outside the firm has a much smaller effect on pensions.

This report is part of the RAND Corporation Draft series. The unrestricted draft was a product of the RAND Corporation from 1993 to 2003 that represented preliminary or prepublication versions of other more formal RAND products for distribution to appropriate external audiences. The draft could be considered similar to an academic discussion paper. Although unrestricted drafts had been approved for circulation, they were not usually formally edited or peer reviewed.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.