Transitions From Career Employment Among Public- and Private-Sector Workers

Abstract

Do the retirement patterns of public-sector workers differ from those in the private sector? Most private-sector workers today face a do-it-yourself retirement income landscape characterized by an exposure to market forces through defined-contribution pension plans and private saving, and the risk of financial insecurity later in life. Public-sector workers, in contrast, are typically covered by defined-benefit pension plans that both encourage retirement at relatively young ages and offer financial security at older ages. As a result, the consequences of private-and publicsector workers' retirement decisions could differ in important ways. For workers generally, and for private-sector workers in particular, a focus among researchers and policymakers has been the importance of continued work later in life for improving financial security at older ages. Such concerns might be of less consequence for public-sector workers due to the prevalence of defined-benefit pensions. Public-sector workers' departures from the labor force might also differ from those in the private sector, all else equal, because of the age-specific incentives within their defined-benefit plans. Despite these important differences, the privatepublic distinction has received relatively little attention in the retirement literature. Our paper examines how private-and public-sector workers transition from career employment to complete labor force withdrawal, with a focus on the role of bridge employment, phased retirement, and re-entry. We identify the prevalence and determinants of each pathway to retirement using longitudinal data on four cohorts of private-and public-sector career older workers from the Health and Retirement Study (HRS). Our findings suggest that the prevalence of work after leaving career employment among public-sector workers resembles that of privatesector workers, although with a higher prevalence of part-time bridge employment, a result that has important implications for public policy as the pace of societal aging accelerates.

Pension reform and return-to-work policies

“…As such, I cannot observe people who return to work for other employers (e.g., in the private sector, in another state). If former public school employees are more likely to be employed in other sectors or for other employers after retirement (Quinn et al, 2018), this estimate of the elasticity of labor supply with respect to hours limitations may be lower than if the hours limitation applied across all forms of employment. Furthermore, employees of IPS participate in a defined benefit pension system that puts return-to-work limitations on their employment.…”

“…This rate of employment is similar to the rate of returning to career jobs in Quinn et al . (2018). Women make up a smaller share of retirees who work (55%) than they do retirees in general (65%).…”

Incentives and limitations of employment policies on retirement transitions

“…Accordingly, as Bronshtein et al (2019) argue, it may be critical for people to work longer, so as to enhance their retirement security. Quinn et al (2019) report that working at a new job or continuing to work part-time in one's FCJ is reasonably common, for both public and private sector workers. Moreover, persistent low returns will, according to Horneff et al (2019), lead to delayed retirement and lower wealth accumulations.…”

What Jobs Do Employers Want Older Workers to Do?

“…5 Bridge jobs are nevertheless of quantitative importance, as attested by a large literature. For examples, see Ruhm (1990), Quinn, Cahill, and Giandrea (2019), and Munnell, Sanzenbacher, and Walters (2019). throughout the country at subsidized and regulated rates, and proposals to extend Medicare eligibility down to younger ages would even more directly address the paucity of jobs offering health insurance to older workers.…”