Kristin McCue (U.S. Census Bureau), Anja Decressin, Julia Lane, Martha Stinson

Employer-Provided Benefit Plans, Workforce Composition and Firm Outcomes

Employer-provision of fringe benefits such as pensions and health insurance has been found to be positively associated with measures of worker skill, reduced turnover, and retirement behavior. Through their effects on a firm's workforce, benefits may also help determine firm outcomes such as productivity and survival. Understanding the determinants of fringe benefit offerings and their consequences for firm outcomes requires information on both parties to the arrangement?workers and employers. But such detailed data are scarce because workers have difficulty reporting benefit details, while employers have difficulty giving detailed information about their employees. Hence work in this area has been hampered by data limitations.

This paper begins to fill this gap by exploiting a new database that combines administrative data on benefits with integrated employer-employee data. The database combines detailed microdata on costs, enrollment and plan features for employer-provided benefits from employers' administrative filings; firm characteristics drawn from the U.S. Census Bureau's Business Register (a list of all private employers) and from the censuses and surveys drawn from that register; and detailed longitudinal information on workforce composition, earnings and turnover for over 1 million U.S. businesses and their employees constructed from unemployment insurance records as part of the LEHD program.

The paper first describes the construction and unique characteristics of this database. It then uses data from these sources for the 1990s to explore the relationship between firm benefit offerings; workforce characteristics such as within-firm distributions of age, sex, wages, human capital, and turnover; and firm outcomes such as productivity and survival.

Keywords: benefits; turnover; compensation; productivity; business survival; churning; employer-employee data

JEL Codes: J24, J32, J33, J63

Session: 1b   Room 2002   Category: Rewarding employees

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