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How Teachers Respond to Pension System Incentives: New Estimates and Policy Applications

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  • Shawn Ni
  • Michael Podgursky

Abstract

Rising costs of public employee pension plans have caused fiscal stress in many cities and states and have led to calls for reform. To assess the economic consequences of plan changes, it is important to have reliable statistical models of employee retirement behavior. The authors estimate a structural model of teacher retirement using Missouri administrative panel data. A Stock-Wise option value model provides a good fit to the data and predicts well out-of-sample on the effects of pension enhancements during the 1990s. The structural model is used to simulate the effect of alternatives to the current defined benefit plan.

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  • 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.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/686263
    DOI: 10.1086/686263
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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. Fitzpatrick, Maria D., 2019. "Pension reform and return-to-work policies," Journal of Pension Economics and Finance, Cambridge University Press, vol. 18(4), pages 500-514, October.
    4. María del Carmen Valls Martínez & José Manuel Santos-Jaén & Fahim-ul Amin & Pedro Antonio Martín-Cervantes, 2021. "Pensions, Ageing and Social Security Research: Literature Review and Global Trends," Mathematics, MDPI, vol. 9(24), pages 1-25, December.
    5. 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.
    6. Vera, Celia Patricia, 2018. "A structural approach to assessing retention policies in public schools," MPRA Paper 90657, University Library of Munich, Germany.
    7. Justin Falk & Nadia Karamcheva, 2018. "Comparing the Effects of Current Pay and Defined Benefit Pensions on Employee Retention: Working Paper 2018-06," Working Papers 54056, Congressional Budget Office.
    8. Morrill, Melinda Sandler & Westall, John, 2019. "Social security and retirement timing: evidence from a national sample of teachers," Journal of Pension Economics and Finance, Cambridge University Press, vol. 18(4), pages 549-564, October.
    9. 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.
    10. Fuchsman, Dillon & McGee, Josh & Zamarro, Gema, 2022. "Teachers’ Knowledge and Preparedness for Retirement: Results from a Nationally Representative Teacher Survey," Working Papers 21-5, Sinquefield Center for Applied Economic Research, Saint Louis University.
    11. Quinby, Laura D. & Wettstein, Gal, 2021. "Do deferred benefit cuts for current employees increase separation?," Labour Economics, Elsevier, vol. 73(C).
    12. Vera Celia P., 2019. "A Structural Approach to Assessing Retention Policies in Public Schools," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(3), pages 1-26, July.
    13. 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.
    14. Dan Goldhaber & Cyrus Grout & Kristian L. Holden & Josh B. McGee, 2024. "Evidence on the Relationship between Pension-Driven Financial Incentives and Late-Career Attrition: Implications for Pension Reform," ILR Review, Cornell University, ILR School, vol. 77(2), pages 175-198, March.
    15. Knapp, David & Hosek, James & Mattock, Michael G. & Asch, Beth J., 2023. "Predicting teacher retention behavior: Ex ante prediction and ex post realization of a voluntary retirement incentive offer," Economics of Education Review, Elsevier, vol. 93(C).
    16. 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.

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    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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