Complementarity of pensions and training under multiemployer plans

We compare firmoptimizing and institutional models of labor contracts to investigate how different types of pension plans affect employee training. Unlike previous stud-ies, we consider an expanded voice model of training and pension coverage in which worker and union preferences feed back on firm decisions, and we test for this bidi-rectional causality between pensions and training. A standard view is that firms pro-vide pensions to optimize their training costs. However, when pension coverage is treated as endogenous in a twostage least squares regression (the data are merged 1991 CPS samples), pensions have a negative effect on training. In contrast, when the pension is a definedbenefit, multiemployer plan, training and pensions are comple-ments, consistent with both optimizing and institutional models. We are grateful for excellent research assistance from Michael Ash, Bhashkar Mazumder, and Judith Ruha and for suggestions from Dale Belman, David Card, B.J. Lee, David MacPherson, and John Turner.