IDEAS home Printed from https://ideas.repec.org/a/tpr/edfpol/v5y2010i4p492-518.html
   My bibliography  Save this article

Teacher Pension Incentives, Retirement Behavior, and Potential for Reform in Arkansas

Author

Listed:
  • Robert M. Costrell

    (Department of Education Reform, University of Arkansas)

  • Josh B. McGee

    (Department of Education Reform, University of Arkansas)

Abstract

The authors analyze the Arkansas teacher pension plan and empirically gauge the behavioral response to incentives embedded in that plan and to possible reforms. The pattern of pension wealth accrual creates sharp incentives to work until eligible for early or normal retirement, often in one's early fifties, and to separate shortly thereafter. We estimate the effect of pension wealth accrual on teacher separation decisions using a new longitudinal data set of Arkansas teachers and find a significant impact. We then simulate the response to eliminating early retirement and raising the service requirement for normal retirement. We also simulate a shift to a constant accrual retirement plan. The response to both reforms is complex, as some would leave earlier and others stay longer. A constant accrual plan smoothes the pattern of retirement behavior as individuals tailor decisions to their own preferences instead of those built into the pension formula. © 2010 American Education Finance Association

Suggested Citation

  • Robert M. Costrell & Josh B. McGee, 2010. "Teacher Pension Incentives, Retirement Behavior, and Potential for Reform in Arkansas," Education Finance and Policy, MIT Press, vol. 5(4), pages 492-518, October.
    • Handle: RePEc:tpr:edfpol:v:5:y:2010:i:4:p:492-518
    as

    Download full text from publisher

    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/EDFP_a_00013
    Download Restriction: Access to PDF is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Patten Priestley Mahler, 2017. "Are Teacher Pensions "Hazardous" for Schools?," Upjohn Working Papers 18-281, W.E. Upjohn Institute for Employment Research.
    2. Fuchsman, Dillon & McGee, Josh B. & Zamarro, Gema, 2023. "Teachers’ willingness to pay for retirement benefits: A national stated preferences experiment," Economics of Education Review, Elsevier, vol. 92(C).
    3. Dongwoo Kim & Cory Koedel & Wei Kong & Shawn Ni & Michael Podgursky & Weiwei Wu, 2021. "Pensions and Late-Career Teacher Retention," Education Finance and Policy, MIT Press, vol. 16(1), pages 42-65, Winter.
    4. Cory Koedel & Michael Podgursky & Shishan Shi, 2013. "Teacher Pension Systems, the Composition of the Teaching Workforce, and Teacher Quality," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(3), pages 574-596, June.
    5. Shawn Ni & Michael Podgursky, 2016. "How Teachers Respond to Pension System Incentives: New Estimates and Policy Applications," Journal of Labor Economics, University of Chicago Press, vol. 34(4), pages 1075-1104.
    6. Figlio, D. & Karbownik, K. & Salvanes, K.G., 2016. "Education Research and Administrative Data," Handbook of the Economics of Education,, Elsevier.
    7. Ni, Shawn & Podgursky, Michael & Wang, Xiqian, 2022. "Teacher pension enhancements and staffing in an urban school district," Journal of Pension Economics and Finance, Cambridge University Press, vol. 21(4), pages 613-633, October.
    8. Wei Kong & Shawn Ni & Michael Podgursky & Weiwei Wu, 2018. "Pension Enhancements and Teacher Retirement Behavior," Working Papers 1814, Department of Economics, University of Missouri.
    9. Johnston, Andrew C., 2021. "Preferences, Selection, and the Structure of Teacher Pay," IZA Discussion Papers 14831, Institute of Labor Economics (IZA).
    10. Maria D. Fitzpatrick & Michael F. Lovenheim, 2014. "Early Retirement Incentives and Student Achievement," American Economic Journal: Economic Policy, American Economic Association, vol. 6(3), pages 120-154, August.
    11. Shawn Ni & Michael Podgursky & Xiqian Wang, 2022. "Teacher Pension Plan Incentives, Retirement Decisions, and Workforce Quality," Journal of Human Resources, University of Wisconsin Press, vol. 57(1), pages 272-303.
    12. Brown, Kristine M., 2013. "The link between pensions and retirement timing: Lessons from California teachers," Journal of Public Economics, Elsevier, vol. 98(C), pages 1-14.
    13. Martin F. Lueken & Michael Podgursky, 2016. "Determinants of Cashing Out: A Behavioral Analysis of Refund Claimants and Annuitants in the Illinois Teachers Retirement System," Working Papers 1605, Department of Economics, University of Missouri.
    14. Quinby, Laura D. & Wettstein, Gal, 2021. "Do deferred benefit cuts for current employees increase separation?," Labour Economics, Elsevier, vol. 73(C).
    15. Laura D. Quinby, 2020. "Do Deferred Retirement Benefits Retain Government Employees?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 469-509, March.
    16. 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.
    17. Cory Koedel & Shawn Ni & Michael Podgursky, 2014. "Who Benefits from Pension Enhancements?," Education Finance and Policy, MIT Press, vol. 9(2), pages 165-192, March.
    18. Kim, Dongwoo, 2020. "Worker retirement responses to pension incentives: Do they respond to pension wealth?," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 365-385.
    19. Robert M. Costrell & Josh McGee, 2019. "Cross-Subsidization of Teacher Pension Costs: The Case of California," Education Finance and Policy, MIT Press, vol. 14(2), pages 327-354, Spring.
    20. Andrew G. Biggs, 2014. "Not so modest: Pension benefits for full-career state government employees," AEI Economic Perspectives, American Enterprise Institute, March.

    More about this item

    Keywords

    teacher retirement benefits; teacher pension plans; pension reform;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpr:edfpol:v:5:y:2010:i:4:p:492-518. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kelly McDougall (email available below). General contact details of provider: https://direct.mit.edu/journals .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.