Adverse Selection and Incentives in an Early Retirement Program
AbstractWe evaluate potential determinants of enrollment in an early retirement incentive program for non-tenure-track employees of a large university. Using administrative record on the eligible population of employees not covered by collective bargaining agreements, historical employee count and layoff data by budget units, and public information on unit budgets, we find dips in per-employee finance in a budget unit during the application year and higher recent per employee layoffs were associated with increased probabiliites of eligible employee program enrollment. Our results also suggest, on average, that employees whose salaries are lower than we would predict given their personal characteristics and job titles were more likely to enroll in the early retirement program. To the extent that employees' compensation reflects their productivity, as it should under a pay system in which annual salary increases are based on merit, this finidng suggests that adverse selection was not a problem with the program. That is, we find no evidence that on average the "most productive" employees took the incentive.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17538.
Date of creation: Oct 2011
Date of revision:
Publication status: published as “Adverse Selection and Incentives in Early Retirement Programs” (with K. Whelan, K. Hallock, and R. Seeber) Research in Labor Economics (2012)
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Other versions of this item:
- Whelan, Kenneth T. & Ehrenberg, Ronald G. & Hallock, Kevin F. & Seeber, Ronald L., 2011. "Adverse Selection and Incentives in an Early Retirement Program," IZA Discussion Papers 6055, Institute for the Study of Labor (IZA).
- I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
This paper has been announced in the following NEP Reports:
- NEP-AGE-2011-11-07 (Economics of Ageing)
- NEP-ALL-2011-11-07 (All new papers)
- NEP-CTA-2011-11-07 (Contract Theory & Applications)
- NEP-LAB-2011-11-07 (Labour Economics)
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