The effect of 31st year pension enhancement on mid- and late-career retirement decisions

Dongwoo Kim

Applied Economics Letters, 2023, vol. 30, issue 2, 229-238

Abstract: A majority of career teachers in Missouri defined benefit pension plan reach their pension wealth peak before their 31st year of service. The 2002 pension enhancement in Missouri generates a local gain in pension wealth that is lower than the peak and also creates an eligibility milestone at the 31st service year. To test whether the 31st year enhancement affects retirement timing decisions for mid- to late-career teachers, I use administrative data of Missouri teachers and employ difference-in-differences models. I find that the 31st year enhancement reduces the likelihood of retirement at early and full retirement eligibilities, and helps retain experienced teachers.

Date: 2023
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DOI: 10.1080/13504851.2021.1983126

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