The Effects of Defined Benefit Pension Incentives and Working Conditions on Teacher Retirement Decisions

Peaks, Cliffs, and Valleys: The Peculiar Incentives in Teacher Retirement Systems and Their Consequences for School Staffing

“…Labor economists have developed more systematic evidence of the behavioral impact of defined benefit pensions in other fields, particularly in the private sector (see, e.g., Friedberg and Webb 2005). There has been much less research on teacher pensions, but that which is available indicates strong incentive effects (Furgeson, Strauss, and Vogt 2006;Brown 2008;Podgursky, Ni, and Ehlert 2008).…”

“…While there have been many studies of the effect of current compensation on teacher turnover (e.g., Murnane and Olsen 1990;Stinebrickner 2001;Hanushek, Kain, and Rivkin 2004;Podgursky, Monroe, and Watson 2004), the econometric literature on teacher pensions is very slender. The only published econometric study to date is by Furgeson, Strauss, and Vogt (2006), who find that Pennsylvania teachers responded to pension incentives. 4 In this article, we analyze the incentives embedded in teacher pension systems by examining the pattern of pension wealth accumulation over a teacher's career.…”

Scrambling the Nest Egg: How Well Do Teachers Understand Their Pensions, and What Do They Think about Alternative Pension Structures?

“…Like other workers, teachers appear to be sensitive to separation incentives. Furgeson, Strauss, and Vogt's (2006) analysis of Pennsylvania teachers, for example, suggests that a 1% increase in the present value of real pension benefits leads to a 2-3% increase in the probability of retirement.…”

“…For now, the evidence base is small. Recent empirical studies include Furgeson, Strauss, and Vogt's (2006) examination of teacher retirement behavior and Costrell andPodgursky's (2007, 2009) analyses of pension wealth accumulation. Elsewhere, Kimball, Heneman, and Kellor (2005) discuss how pensions might help attract teachers to the profession; more recently, Hansen (2009) and Loeb, Miller, and Strunk (2009) provide useful overviews.…”

Early Retirement Incentives and Student Achievement

“…The growing literature on teacher retirement focuses largely on the role of the retirement incentives embedded in pension plans (Furgeson, Strauss and Vogt 2006;Costrell and Podgursky 2009;Costrell and McGee 2010;Brown and Laschever 2012;Brown 2013) and retirement's responsiveness to student performance and school demographics (Hanushek, Kain and Rivkin 2004;Mahler 2012). Though these studies provide clear evidence that teacher labor supply is responsive to pension incentive structures, how these retirement incentives affect student outcomes is unknown.…”