Wharton Pension Research Council Working Papers

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Working Paper

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Employee benefits of the future will be shaped by workplace developments. In the short-term, economic volatility due to the business cycle and economic shocks will influence both labor supply and labor demand, and hence compensation including benefits. Longer-term developments are to some extent foreseeable, induced by demographic trends shifting the age, sex, and ethnic/racial mix of the workforce. Others include changes in household and family characteristics of the workforce, and changes in job and labor market attachment. Long-term changes will also driven by the demand side of the labor market, as employers respond to the stresses of a more high-tech, competitive, and global economy. Employers will still seek to use benefits as recruiting and retention tools, as well as a means to induce optimal turnover. Government policy is also influential, partly via benefits provision and increasingly via benefits mandates. We suggest that future labor markets will likely be tighter than today’s, boosting both pay and benefits growth. However benefits packages will become more “unbundled,” providing tax-qualified compensation and the appeal of automatic saving mechanisms. To the extent that benefits become further unbundled, this will enhance labor market flexibility but curtail some of the key insurance aspects that benefits provided.


The published version of this Working Paper may be found in the 2003 publication: Benefits for the Workplace of the Future.

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©2001 Pension Research Council of the Wharton School of the University of Pennsylvania. All Rights Reserved.

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Economics Commons



Date Posted: 13 September 2019