Abstract
This paper argues that employers using defined‐benefit pension plans are forced by competitive conditions to lower females' earnings to account for more costly pension liabilities resulting from longer life expectancy. A newly constructed data set containing employee salary histories and pension plan descriptions from five firms is used to calculate how much more it costs to employ a female vs. a male worker, identical except for life expectancy. It is demonstrated that each dollar of increased pension liabilities results in a reduction in females' salaries by fifty‐five cents. Implications of these findings for the 1983 Supreme Court ruling involving sex‐linked pension benefits are discussed.
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