CRI Working Papers

How Do State Retirement Savings Policies Affect Labor Supply?

This study investigates the labor market impacts of state-based retirement savings policies, often referred to as automatic-enrollment IRA (AutoIRA) programs. Utilizing data from the Annual Social and Economic Supplement to the Current Population Survey (CPS-ASEC) from 2010 to 2023, the authors estimate Two-Way Fixed Effects (TWFE) and staggered Difference-in-Differences (CSDiD) models. Despite the theoretical ambiguity surrounding the effects of workplace retirement savings options on labor markets, empirical findings reveal that these policies increase private-sector employment by 1.8% to 2.3% and may increase earnings by 2% to 4%. These findings contribute to the literature on how retirement savings policies, specifically private pensions (e.g., DC plans and IRAs), influence workers’ labor supply behavior and firms’ wage decisions.