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Retirement Choices by State and Local Public Sector Employees: The Role of Eligibility and Financial Incentives

In: Incentives and Limitations of Employment Policies on Retirement Transitions

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  • Leslie E. Papke

Abstract

I analyze the effects of state public pension parameters on the retirement of public employees. Using a panel data set of public sector workers from 12 waves of the Health and Retirement Study, I model the probability of retirement as a function of pension wealth at early and normal retirement eligibility and Social Security coverage in the public sector job. I find that becoming eligible for early retirement, or receiving an early-out offer, significantly increases the probability of retiring. I do not find any effect of retirement wealth levels. These findings suggest that state legislative action to affect retirement decisions and reduce future pension costs would be most effective operating through plan eligibility rules and early-out incentives.
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Suggested Citation

  • Leslie E. Papke, 2018. "Retirement Choices by State and Local Public Sector Employees: The Role of Eligibility and Financial Incentives," NBER Chapters, in: Incentives and Limitations of Employment Policies on Retirement Transitions, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14176
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    Cited by:

    1. Hsu, De Fen & Morrill, Melinda & Pathak, Aditi, 2024. "Health and retirement: Heterogeneity in the responsiveness to pension incentives," Economics Letters, Elsevier, vol. 238(C).
    2. Leslie E. Papke, 2021. "Underfunded Public Sector Pension Plans, Social Security Participation, and the Retirement Decisions of Public Employees," Working Papers wp420, University of Michigan, Michigan Retirement Research Center.

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    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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