Evidence on the Relationship between Pension-Driven Financial Incentives and Late-Career Attrition: Implications for Pension Reform

Dan Goldhaber, Cyrus Grout, Kristian L. Holden and Josh B. McGee

ILR Review, 2024, vol. 77, issue 2, 175-198

Abstract: Retirement plans can create strong financial incentives that have important labor market implications, and many states have adopted alternative plan designs that significantly change these incentives. The authors use longitudinal data to investigate the impact of Washington State’s 1996 introduction of a hybrid retirement plan on late-career attrition. The unique setup of Washington’s plans allows them to provide empirical evidence on the influence of financial incentives created by statutory retirement eligibility thresholds. Findings show that despite facing very different financial incentives, teachers enrolled in the hybrid and traditional plans respond similarly to reaching a key retirement eligibility threshold. The authors hypothesize that teachers are anchoring to the eligibility thresholds, muting the influence of the financial incentives. They also provide evidence that, in the presence of bright-line eligibility thresholds that can anchor workers’ separation behavior, commonly used structural models may overpredict workers’ responsiveness to the financial incentives embedded in retirement plans.

Keywords: employer-provided pension coverage; retirement; empirical analysis; personnel data; public sector; retention (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/00197939231221784 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:ilrrev:v:77:y:2024:i:2:p:175-198

DOI: 10.1177/00197939231221784

Access Statistics for this article

More articles in ILR Review from Cornell University, ILR School
Bibliographic data for series maintained by SAGE Publications ().