Hostname: page-component-586b7cd67f-2brh9 Total loading time: 0 Render date: 2024-11-22T07:24:56.975Z Has data issue: false hasContentIssue false
  • English
  • Français

Social security and retirement timing: evidence from a national sample of teachers

Published online by Cambridge University Press:  11 February 2019

Melinda Sandler Morrill  and
John Westall
Melinda Sandler Morrill*
Affiliation:
Department of Economics, North Carolina State University, Raleigh, NC 27695-8110, USA
John Westall
Affiliation:
Department of Economics, North Carolina State University, Raleigh, NC 27695-8110, USA
*
*Corresponding author. Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

This study documents an important role for Social Security income in workers’ retirement timing. About 40% of public school teachers are not covered by Social Security. This provides an opportunity to analyze the causal impact of Social Security on retirement timing by comparing covered and non-covered teachers. Using individual-level data from the American Community Survey, we find robust evidence of higher rates of retirement among covered teachers at Social Security eligibility ages. This pattern is confirmed using an alternative regression model of participation in the teacher labor force. These estimates suggest that, should the federal government mandate full inclusion in Social Security for all public sector workers, the retirement timing patterns of newly covered teachers and other public sector workers would likely change.

Keywords

Public pensionsretirement timingSocial Securityteachers
Type
Article
Information
Journal of Pension Economics & Finance , Volume 18 , Special Issue 4: Incentives and Limitations of Employment Policies on Retirement Transitions , October 2019 , pp. 549 - 564
Copyright
Copyright © Cambridge University Press 2019 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Asch, B, Haider, SJ and Zissimopoulos, J (2005) Financial incentives and retirement: evidence from federal civil service workers. Journal of Public Economics 89(2), 427–440.Google Scholar
Blau, DM (1998) Labor force dynamics of older married couples. Journal of Labor Economics 16(3), 595–629.Google Scholar
Brown, KM (2013) The link between pensions and retirement timing: lessons from California teachers. Journal of Public Economics 98, 1–14.Google Scholar
Clark, RL and Craig, LA (2011) Determinants of the generosity of pension plans for public school teachers, 1982–2006. Journal of Pension Economics & Finance; Cambridge 10(1), 99–118.Google Scholar
Clark, RL and McDermed, AA (1986) Earnings and pension compensation: the effect of eligibility. The Quarterly Journal of Economics 101(2), 341–361.Google Scholar
Clark, RL and Morrill, MS (2010) Retiree Health Plans in the Public Sector: Is There A Funding Crisis? Edward Elgar Publishing. Cheltenham, UK and Northhampton, MA, USA.Google Scholar
Coile, CC (2004) Retirement incentives and couples’ retirement decisions. Topics in Economic Analysis & Policy 4(1).Google Scholar
Coile, CC (2015) Economic determinants of workers retirement decisions. Journal of Economic Surveys 29(4), 830–853.Google Scholar
Coile, CC and Gruber, J (2007) Future social security entitlements and the retirement decision. The Review of Economics and Statistics 89(2), 234–246.Google Scholar
Coile, CC and Levine, PB (2007) Labor market shocks and retirement: do government programs matter? Journal of Public Economics 91(10), 1902–1919.Google Scholar
Costrell, RM and Podgursky, M (2009) Peaks, cliffs, and valleys: the peculiar incentives in teacher retirement systems and their consequences for school staffing. Education Finance and Policy 4(2), 175–211.Google Scholar
Diamond, PA and Orszag, PR (2003) Reforming the GPO and WEP In Social Security. Tax Notes, 647–649.Google Scholar
Dudel, C and Myrskyl, M (2017) Working life expectancy at age 50 in the United States and the impact of the great recession. Demography 54(6), 2101–2123.Google Scholar
Engelhardt, GV, Gruber, J and Kumar, A (2018) Early Social Security Claiming and Old-Age Poverty: Evidence from the Introduction of the Social Security Early Eligibility Age. Working Paper 24609, National Bureau of Economic Research. Cambridge, MA.Google Scholar
Fetter, DK and Lockwood, LM (2018) Government Old-Age Support and Labor Supply: Evidence From the Old Age Assistance Program. American Economic Review. 108(8), 2174–2211.Google Scholar
Fitzpatrick, MD (2015) How much are public school teachers willing to pay for their retirement benefits? American Economic Journal: Economic Policy 7(4), 165–188.Google Scholar
Fitzpatrick, MD and Lovenheim, MF (2014) Early retirement incentives and student achievement. American Economic Journal: Economic Policy 6(3), 120–154.Google Scholar
Furgeson, J, Strauss, RP and Vogt, WB (2006) The effects of defined benefit pension incentives and working conditions on teacher retirement decisions. Education Finance and Policy 1(3), 316–348.Google Scholar
Gale, WG, Holmes, SE and John, DC (2015) Social Security Coverage for State and Local Government Workers: A Reconsideration. The Journal of Retirement 3(2), 123–135.Google Scholar
GAO-03-710T (2003) Social Security: Issues Relating to Noncoverage of Public Employees. United States General Accounting Office. Technical Report.Google Scholar
GAO-05-786T (2005) Social Security: Coverage of Public Employees and Implications for Reform. Statement of Barbara D. Bovbjerg, Director, Education, Workforce, and Income Security. Testimony. Technical report.Google Scholar
GAO-10-938 (2010) Management Oversight Needed to Ensure Accurate Treatment of State and Local Government Employees. Technical report.Google Scholar
GAO-HEHS-98-196 (1998) Social Security: Implications of Extending Mandatory Coverage to State and Local Employees. Technical report.Google Scholar
Gustman, AL and Steinmeier, TL (2000) Retirement in DualCareer families: a structural model. Journal of Labor Economics 18(3), 503–545.Google Scholar
Gustman, AL, Steinmeier, TL and Tabatabai, N (2013). The Social Security Windfall Elimination and Government Pension Offset Provisions for Public Employees in the Health and Retirement Study. Working Paper 19724, National Bureau of Economic Research. Cambridge, MA.Google Scholar
Gustman, AL, Steinmeier, TL and Tabatabai, N (2014) The social security windfall elimination and government pension offset provisions for public employees in the health and retirement study. Social Security Bulletin 74, 55.Google Scholar
Haider, SJ and Loughran, DS (2008) The effect of the social security earnings test on male labor supply new evidence from survey and administrative data. Journal of Human Resources 43(1), 57–87.Google Scholar
Haltzel, L (2004) Social Security: The Government Pension Offset (GPO). CRS Report for Congress, Domestic Social Policy Division.Google Scholar
Harris, DN and Adams, SJ (2007) Understanding the level and causes of teacher turnover: a comparison with other professions. Economics of Education Review 26(3), 325–337.Google Scholar
Henriques, AM (2018) How does social security claiming respond to incentives? Considering husbands’ and wives’ benefits separately. Journal of Human Resources 53(2), 382–413.Google Scholar
Kan, L and Aldeman, C (2014) Uncovered: Social Security, Retirement Uncertainty, and 1 Million Teachers. Illinois, USA: Bellwether Education Partners. TeacherPensions.orgGoogle Scholar
Kilgour, JG (2009) Social security and the public sector: the windfall elimination provision and the government pension offset. Compensation & Benefits Review 41(5), 34–42.Google Scholar
Koedel, C, Ni, S and Podgursky, M (2014) Who benefits from pension enhancements? Education Finance and Policy 9(2), 165–192.Google Scholar
Koedel, C and Podgursky, M (2016). Chapter 6 – teacher pensions. In Hanushek, EA, Machin, S and Woessmann, L (eds), Handbook of the Economics of Education. Amsterdam, North-Holland: Elsevier, vol. 5, pp. 281–303.Google Scholar
Koedel, C and Xiang, PB (2017) Pension enhancements and the retention of public employees. ILR Review 70(2), 519–551.Google Scholar
Lazear, EP (1986). Chapter 5 – retirement from the labor force. In Ashenfelter OC and Layard R Handbook of Labor Economics. Amsterdam, North-Holland: Elsevier, vol. 1, pp. 305–355.Google Scholar
Liebman, JB, Luttmer, EFP and Seif, DG (2009) Labor supply responses to marginal Social Security benefits: evidence from discontinuities. Journal of Public Economics 93(11), 1208–1223.Google Scholar
Maestas, N (2017) The Return to Work and Women's Employment Decisions. NBER Working Paper. National Bureau of Economic Research, Cambridge, MA. Available at http://www.nber.org/papers/w24429.Google Scholar
Mastrobuoni, G (2011) The role of information for retirement behavior: evidence based on the stepwise introduction of the Social Security statement. Journal of Public Economics 95(7), 913–925.Google Scholar
Munnell, AH (2000) The Impact of Mandatory Social Security Coverage of State and Local Workers: A Multi-State Review. page 92. Washington, DC: American Association of Retired Persons, Public Policy Institute.Google Scholar
Munnell, AH (2005) Mandatory Social Security Cover-Age of State and Local Workers: A Perennial Hot Button. Boston College, Center for Retirement Research at Boston College page 9.Google Scholar
Ni, S and Podgursky, M (2016) How teachers respond to pension system incentives: new estimates and policy applications. Journal of Labor Economics 34(4), 1075–1104.Google Scholar
Nuschler, D, Shelton, AM and Topoleski, JJ (2011) Social Security: Mandatory Coverage of New State and Local Government Employees. Washington, DC: Congressional Research Service.Google Scholar
Snyder, SE and Evans, WN (2006) The effect of income on mortality: evidence from the social security notch. The Review of Economics and Statistics 88(3), 482–495.Google Scholar
Stock, JH and Wise, DA (1990) Pensions, the option value of work, and retirement. Econometrica 58(5), 1151–1180.Google Scholar
Supplementary material: File

Morrill and Westall supplementary material

Appendix

Download Morrill and Westall supplementary material(File)
File 47.2 KB