Public school teachers retire much earlier than comparable professionals. Pension rule changes affecting new teachers can be used to close this gap in the long run, but any effects will not be observed for decades and the implications for workforce quality are unclear. This paper considers targeted incentive policies designed to retain experienced high-need teachers, of retirement age, as instruments to extend current teachers’ careers.
Working paper WP 16-08 has now been replaced by WP 17-08.
We use data from workers in the largest public-sector occupation in the United States – teaching – to examine the effect of pension enhancements on employee retention. Specifically, we study a 1999 enhancement to the benefit formula for public school teachers in St. Louis that resulted in an immediate and dramatic increase in their incentives to remain in covered employment.