Affiliation:
1. University of International Business and Economics Beijing China
2. The University of Texas at El Paso El Paso USA
3. New Mexico State University Las Cruces USA
Abstract
AbstractWe examine the effect of unexpected defined benefit (DB) pension contributions on employee productivity. The Tax Cuts & Jobs Act (TCJA), implemented in the U.S. in 2017, decreased the corporate tax rate from 35 percent in 2017 to 21 percent in 2018. This change incentivized firms to increase DB pension contributions in 2017 . The TCJA provides an opportunity to study the motivation effect of unexpected employee benefits. We empirically find that resulting increases in DB pension contributions motivate employees to produce, and that labor intensity and length of operating cycle can enhance this association. We also find that general unexpected pension contributions have no pronounced effect on employee productivity. We further show that such a change in pension contributions does not significantly increase overproduction costs.
Subject
General Economics, Econometrics and Finance,Accounting
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