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Journal of Pension Economics & Finance Journal of Pension Economics & Finance

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Retirement choices by state and local public sector employees: the role of eligibility and financial incentives

Published online by Cambridge University Press:  28 January 2019

Leslie E. Papke
Leslie E. Papke
Affiliation:
Department of Economics, Michigan State University, 486 West Circle Drive, East Lansing, MI 48824
Corresponding
E-mail address:
papke@msu.edu
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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. 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.

Keywords

Health and Retirement Study public pensions state and local pension policy retirement H75 H72 J26
Type
Article
Information
Journal of Pension Economics & Finance , Volume 18 , Special Issue 4: Incentives and Limitations of Employment Policies on Retirement Transitions , October 2019 , pp. 515 - 528
Copyright
Copyright © Cambridge University Press 2019 

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