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- Title
Can unexpected pension contributions improve employee productivity? Evidence from the Tax Cuts and Jobs Act of 2017.
- Authors
Dai, Narisa Tianjing; Liu, Leo Jiahe; Pérez, Rebeca
- Abstract
We 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.
- Subjects
LABOR productivity; TAX cuts; DEFINED benefit pension plans; EMPLOYEE benefits; PENSIONS; EMPLOYEE motivation; PENSION reform
- Publication
Journal of Corporate Accounting & Finance (Wiley), 2024, Vol 35, Issue 2, p25
- ISSN
1044-8136
- Publication type
Article
- DOI
10.1002/jcaf.22668