Retirement Benefits and Teacher Retention: A Structural Modeling Approach

Knapp, David; Brown, Kristine M.; Hosek, James; Mattock, Michael G.; Asch, Beth J.

doi:10.7249/rr1448

Cited by 14 publications

(26 citation statements)

References 30 publications

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“…Findings from Dolton and von der Klaauw (1995), Feng (2009), Glazerman et al (2012), and Hanushek, Kain, and Rivkin (2004) imply inelastic labor supply, while studies by Clotfelter et al (2008), Falch (2010), and Feng and Sass (2016) find somewhat larger labor-supply elasticities. However, in contrast to the mixed findings from research on the teaching workforce as a whole, studies of senior teachers consistently show a high degree of responsiveness to pension system incentives (Furgeson et al, 2006;Costrell and McGee, 2010;Brown, 2013;Fitzpatrick and Lovenheim, 2014;Ni and Podgursky, 2016;Knapp et al, 2016). Traditional teacher pension plans (i.e., final average salary defined-benefit) contain strong incentives designed to "pull" teachers to certain combinations of age or experience, and then "push" them into retirement.…”

Section: Introductionmentioning

confidence: 87%

Pensions and Late-Career Teacher Retention

Kim

Koedel

Kong

et al. 2021

Education Finance and Policy

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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 deter retirement among senior, experienced high-need science and math (STEM) teachers, as a policy to staff classrooms with qualified teachers and improve workforce quality. We use structural estimates from a dynamic retirement model to simulate the workforce effects of targeted late-career salary bonuses and deferred retirement plans (DROPs) using administrative data from Missouri. While both policies produce additional teaching years at relatively low costs, by forcing teachers to reveal work-retirement preferences, DROPs generally yield incremental teacher years at lower cost per year. More generally, this work highlights the utility of using structural retirement models to analyze fiscal and workforce effects of changes to public sector pension plans, since the effects of pension rule changes cumulate over many years.

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Section: Introductionmentioning

confidence: 87%

Pensions and Late-Career Teacher Retention

Kim

Koedel

Kong

et al. 2021

Education Finance and Policy

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“…To date, the most consistent predictions about how mid-career workers will likely respond to benefit cuts come from structural models that simulate behavior. These models suggest that mid-career teachers would respond modestly to changes in retirement ages, benefit multipliers, and COLAs (Costrell and McGee 2010;and Knapp et al 2016). However, it is difficult to determine whether these estimates would play out in reality without exploiting a natural experiment and, to our knowledge, no one has taken this route.…”

Section: Literature Reviewmentioning

confidence: 99%

Do Pension Cuts for Current Employees Increase Separation?

Quinby

Wettstein

2019

SSRN Journal

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This study examines whether deferred benefit cuts affecting current public employees encourage mid-career teachers and civil servants to separate from their employers. The analysis takes advantage of a 2005 reform to the Employees' Retirement System of Rhode Island (ERSRI) that dramatically reduced the generosity of benefits for current workers. Importantly, the cuts applied only to ERSRI members who had not vested by June 30, 2005. High-tenure ERSRI members and municipal government employees in Rhode Island were unaffected. This sharp difference in benefit levels permits a triple-differences research design in which low-tenure ERSRI members are compared, before and after the reform, to high-tenure members, and to lowand high-tenure members of the Municipal Employees' Retirement System of Rhode Island. The results show that the benefit cut caused a 2.4-percentage-point increase in the rate of separation, implying an elasticity of employer-specific labor supply with respect to deferred benefits of 0.28. Although state employees were more sensitive to benefit cuts than teachers, the low elasticities for both groups suggest that the labor market for public employees may not be highly competitive.

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“…In this research, we extend a dynamic model of teacher retention behavior, estimated in Knapp et al (2016), to predict the number of teachers willing to accept a voluntary retirement incentive and retire. This section provides an overview of the model and then gives a more formal presentation of the model from Knapp et al (2016). Readers less interested in the technical details might skip this more formal discussion.…”

Section: Dynamic Retention Model For Cps Teachersmentioning

confidence: 99%

“…At the last observation, 36 percent had a bachelor's and 64 percent had a master's or higher. Additional descriptive statistics are available in Knapp et al (2016).…”

Section: Data and Parameter Estimates Chicago Teacher Retention Datamentioning

confidence: 99%

“…In this research, we extend a dynamic model of teacher retention behavior, previously estimated in Knapp, Brown, Hosek, Mattock, and Asch (2016), to predict the number of teachers willing to accept a voluntary retirement incentive and retire. The model is estimated on CPS teacher data for teachers that start their career in Chicago and accounts for current and deferred compensation as well as permanent unobserved differences in a teacher's net preference, or taste, for teaching in CPS over the next best alternative.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Exploring Voluntary Retirement Incentives for Teachers: Effects on Retention and Cost in Chicago Public Schools

Knapp¹,

Hosek²,

Mattock³

et al. 2018

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show abstract

Retirement Benefits and Teacher Retention: A Structural Modeling Approach

Cited by 14 publications

References 30 publications

Pensions and Late-Career Teacher Retention

Pensions and Late-Career Teacher Retention

Do Pension Cuts for Current Employees Increase Separation?

Exploring Voluntary Retirement Incentives for Teachers: Effects on Retention and Cost in Chicago Public Schools

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