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

Leslie E. Papke

Chapter in NBER book Incentives and Limitations of Employment Policies on Retirement Transitions (2019), Robert L. Clark and Joseph P. Newhouse, organizers
Conference held August 10-11, 2018
Published in October 2019 by Cambridge University Press, Journal of Pension Economics and Finance, vol. 18, special issue 4

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. These findings suggest that state legislative action to affect retirement decisions and reduce future pension costs would be most effective operating through plan eligibility rules and early-out incentives.

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Document Object Identifier (DOI): https://doi.org/10.1017/S1474747218000446

This chapter first appeared as NBER working paper w25436, Retirement Choices by State and Local Public Sector Employees: The Role of Eligibility and Financial Incentives, Leslie E. Papke
 
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