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Pension Enhancements and the Retention of Public Employees

Author

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  • Cory Koedel
  • P. Brett Xiang

Abstract

The authors use data from workers in the largest public-sector occupation in the United States—teaching—to examine the effect of pension enhancements on employee retention. Specifically, they study a 1999 enhancement to the benefit formula for public school teachers in St. Louis, Missouri, that resulted in an immediate and dramatic increase in their incentives to remain in covered employment. To identify the effect of the enhancement on teacher retention, the analysis leverages the fact that the strength of the incentive increase varied across the workforce depending on how far teachers were from retirement eligibility when it was enacted. The results indicate that the St. Louis enhancement—which was structurally similar to enhancements that were enacted in other public pension plans across the United States in the late 1990s and early 2000s—was not a cost-effective way to increase employee retention.

Suggested Citation

  • Cory Koedel & P. Brett Xiang, 2017. "Pension Enhancements and the Retention of Public Employees," ILR Review, Cornell University, ILR School, vol. 70(2), pages 519-551, March.
  • Handle: RePEc:sae:ilrrev:v:70:y:2017:i:2:p:519-551
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    References listed on IDEAS

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    1. Glaeser, Edward L. & Ponzetto, Giacomo A.M., 2014. "Shrouded costs of government: The political economy of state and local public pensions," Journal of Public Economics, Elsevier, vol. 116(C), pages 89-105.
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    Citations

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    Cited by:

    1. Patten Priestley Mahler, 2017. "Are Teacher Pensions "Hazardous" for Schools?," Upjohn Working Papers and Journal Articles 18-281, W.E. Upjohn Institute for Employment Research.

    More about this item

    Keywords

    labor market institutions; labor and employment policies; labor supply elasticities; pay practices; economics; education; retirement; retention;

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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