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Retirement Incentives and Behavior of Private and Public Sector Workers

Courtney Coile, Susan Stewart


This chapter is a preliminary draft unless otherwise noted. It may not have been subjected to the formal review process of the NBER. This page will be updated as the chapter is revised.

Chapter in forthcoming NBER book Incentives and Limitations of Employment Policies on Retirement Transitions: Comparisons of Public and Private Sectors, Robert L. Clark and Joseph P. Newhouse, organizers
Conference held August 9-10, 2019
Forthcoming from Journal of Pension Economics and Finance (Cambridge University Press)

Over the past several decades, private sector workers in the USA with employed-sponsored pensions have experienced a dramatic shift from defined benefit (DB) to defined contribution plans, while this trend has been less pronounced for public sector workers. In this paper, we use data from the Health and Retirement Study to explore changes in the retirement incentives and retirement behavior of public and private sector workers over the past quarter-century. We find that both groups have become less likely to report having a DB pension or any pension. Compared to their private sector counterparts, public sector workers have a higher level of retirement wealth and a larger financial gain from continued work at older ages, and these differences by sector are growing across cohorts. Both groups respond to financial incentives in making retirement decisions. However, growing differences by sector in the gain to continued work do not appear to have translated into diverging retirement behavior, as we observe similar trends in the two groups.

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Document Object Identifier (DOI): 10.1017/S1474747219000416

 
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