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The average rate of contribution by U.S. Black and Hispanic workers to employer-sponsored retirement plans is roughly 40 per cent lower than that of white workers, according to a new working paper by the Massachusetts Institute of Technology’s Sloan School of Management.

The paper examined responses from more than 12 million respondents aged 24 to 59 who participated in the U.S. Census Bureau’s American Community Surveys between 2008 and 2017. It found Black workers were twice as likely as white workers to take money out of their retirement accounts early, while Hispanic employees were 21 per cent more likely to make early withdrawals.

Read: Fewer Black, Latino employees participating in U.S. workplace retirement plans: report

Since withdrawing money early usually is subject to income tax as well as a one-time tax penalty, Black and Hispanic workers are getting fewer tax benefits and paying more in taxes when they take these withdrawals, said the paper, noting for every dollar of tax benefit that a white employee receives, Hispanic workers receive 62 cents and Black employees receive just 31 cents. When sorting by parental income, the researchers also found large gaps in the propensity to take early withdrawals.

The study also found employees who are short on cash are reluctant to contribute to a retirement fund, knowing they’ll be penalized if they need to withdraw money in an emergency.

“Our findings suggest that there can actually be a deterrent effect in making these accounts illiquid,” said Lawrence Schmidt, an assistant professor of finance at MIT Sloan and one of the paper’s authors, in a press release. “The penalty was intended to keep people from spending their retirement money on other things, but an unintended consequence is that it might make retirement accounts less desirable and reduce participation in the first place.”

Read: Fewer than 40% of Black Americans say they’ve saved enough for retirement: survey