Employers make contributions to pension funds on behalf of employees.In many instances,however,a worker is not entitled to collect from the pension unless she has worked for the firm a minimum number of years.Once the worker has worked the necessary number of years to be eligible to collect from the pension fund,the worker is said to be vested in the pension fund.A governmentally mandated change in vesting to make all workers become fully vested sooner would
A) increase utility of all workers.
B) increase utility of workers who plan to stay with a company for the length of their time in the labor force.
C) probably cause firms affected by the legislation to decrease wages.
D) probably cause firms not affected by the legislation to increase wages.

Question

Quizplus · Accepted Answer

A governmentally mandated change in vesting would increase costs for firms, as they would have to contribute to pension funds for more employees. To offset these increased costs, firms might decrease wages.

Employers Make Contributions to Pension Funds on Behalf of Employees