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Pensions and Late-Career Teacher Retention

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Abstract

Public school teachers retire much earlier than comparable professionals. Pension rule changes affecting new teachers can be used to close this gap in the long run, but any effects will not be observed for decades and the implications for workforce quality are unclear. This paper considers targeted incentive policies designed to retain experienced high-need teachers, of retirement age, as instruments to extend current teachers’ careers. We use structural estimates from a dynamic retirement model to simulate the workforce effects of targeted late-career salary bonuses and deferred retirement (DROP) plans using administrative data from Missouri. The simulations suggest that such programs can be cost-effective, partly because long-term pension savings offset a portion of up front program costs. More generally, we demonstrate the utility of using structural retirement models to analyze fiscal and workforce effects of changes to public sector pension plans, since the effects of pension reforms cumulate over many years.

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  • Dongwoo Kim & Cory Koedel & Shawn Ni & Michael Podgursky & Weiwei Wu, 2017. "Pensions and Late-Career Teacher Retention," Working Papers 1708, Department of Economics, University of Missouri.
    • Handle: RePEc:umc:wpaper:1708
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    Cited by:

    1. Papke, Leslie E., 2019. "Retirement choices by state and local public sector employees: the role of eligibility and financial incentives," Journal of Pension Economics and Finance, Cambridge University Press, vol. 18(4), pages 515-528, October.

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    More about this item

    Keywords

    public pensions; retirement; worker retention; teacher retention;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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