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Title: Labor Market Effects of Pensions and Implications for Teachers

Citation Type: Journal Article

Publication Year: 2010

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Abstract: While the retirement security landscape has changeddrastically for most workers over the last twenty years,traditional defined benefit (DB) pension plans remainthe overwhelming norm for K12 teachers. Because DBplans pay off fully with a fixed income after retirementonly if a teacher stays in the profession for decades andyield little or nothing if a teacher leaves early, DB plansinduce a strong, nonlinear relationship between yearsof tenure and benefit accrual. One implication is thatas many current teachers approach eligibility for fullpensions, there are strong incentives for retirement andassociated consequences in the teacher labor market.In this article, we assess the key features of DB plans,discuss the general incentive effects, and consider theapplication to the particular case of teachers. This workhighlights the importance of assessing the characteristicsof teachers who respond most to the retirementtiming incentives.

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Authors: Turner, Sarah; Friedberg, Leora

Periodical (Full): Education Finance and Policy

Issue: 4

Volume: 5

Pages: 463-491

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Poverty and Welfare

Countries: United States