Double Disadvantages of the Less Educated: Education and Contributory Pensions at Work

• In Event: 555 - Section on Sociology of Education Paper Session. Educational Gradients in Adult Attainments

Abstract

Economic resources later in life increasingly depend on participating in voluntary, contributory retirement plans due to the change from defined benefit (DB) to defined contribution (DC) pensions. Using multiple panels of the Survey of Income and Program Participation linked to W-2 tax records containing respondents’ contributions to DC pensions, we examine how participation in and contribution levels to DC retirement plans among eligible US workers differ by education. Our analysis disentangles the effects of education that operate via labor market structures from other pathways. The findings show that workers’ earnings level is, by far, the most influential labor market factor. The results also uncover an important independent effect of education. Our results imply that the less-educated are doubly disadvantaged in the accumulation of retirement resources by the growth in income inequality and by the change in workplace pensions. Taken as a whole, our findings bring into center stage the growing importance of education in the process of stratification in retirement wealth formation during working years within the context of changing employment institutions. By documenting the educational gradient in outcomes in DC retirement plans, the most common today, we expand the focus on the role of education in economic stratification beyond earnings and occupation to also consider outcomes related to retirement savings, long-term financial well-being, and asset accumulation. We discuss implications for economic stratification and later-life inequality.

Authors

• Christopher R. Tamborini, U.S. Social Security Administration

• ChangHwan Kim, University of Kansas