Retirement Choices by State and Local Public Sector Employees: The Role of Eligibility and Financial Incentives

Leslie Papke

No 25436, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I analyze the effects of state public pension parameters on the retirement of public employees. Using a panel data set of public sector workers from 12 waves of the Health and Retirement Study, I model the probability of retirement as a function of pension wealth at early and normal retirement eligibility and Social Security coverage in the public sector job. I find that becoming eligible for early retirement, or receiving an early-out offer, significantly increases the probability of retiring. I do not find any effect of retirement wealth levels; instead the findings are consistent with the literature on default options in defined contribution plans. These findings suggest that state legislative action to affect retirement decisions and reduce future pension costs may be most effective operating through plan eligibility rules and early-out incentives.

JEL-codes: H72 H75 J26 J45 J82 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-age, nep-lma and nep-pbe
Note: AG
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Citations: View citations in EconPapers (2)

Published as Retirement Choices by State and Local Public Sector Employees: The Role of Eligibility and Financial Incentives , Leslie E. Papke. in Incentives and Limitations of Employment Policies on Retirement Transitions , Clark and Newhouse. 2019
Published as Leslie E. Papke, 2019. "Retirement choices by state and local public sector employees: the role of eligibility and financial incentives," Journal of Pension Economics and Finance, vol 18(04), pages 515-528.

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Journal Article: Retirement choices by state and local public sector employees: the role of eligibility and financial incentives (2019)
Chapter: Retirement Choices by State and Local Public Sector Employees: The Role of Eligibility and Financial Incentives (2018)
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