Retiree Health Benefits as Deferred Compensation
AbstractAre early retiree health benefits (RHBs) a form of deferred compensation binding workers to an employer? Most employers who offer RHBs offer them only to workers who have ten or more years of tenure and have reached age fifty-five. Accordingly, workers in firms offering RHBs have an incentive to stay with a firm in the years before they attain eligibility for RHBs, and a greater incentive than otherwise to retire thereafter. The authors test for such a pattern of incentives by examining the age-specific relationship between workersâ€™ eligibility for RHBs and retirement. The findings suggest that workers in RHB-offering firms are less likely to retire at ages fifty and fifty-one than similar RHB-ineligible workers. Also, RHB-eligible workers aged sixty and sixty-one are more likely to retire than similar RHB-ineligible workers. These results are consistent with RHBs acting as part of a delayed payment contract of the kind described by Lazear.
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Bibliographic InfoArticle provided by in its journal Public Finance Review.
Volume (Year): 41 (2013)
Issue (Month): 1 (January)
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- Maria D. Fitzpatrick, 2013.
"Retiree Health Insurance for Public School Employees: Does it Affect Retirement?,"
CESifo Working Paper Series
4415, CESifo Group Munich.
- Maria D. Fitzpatrick, 2013. "Retiree Health Insurance for Public School Employees: Does it Affect Retirement?," NBER Working Papers 19524, National Bureau of Economic Research, Inc.
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