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  3. American Economic Journal: Applied Economics
  4. July 2012
  5. When They're Sixty-Four: Peer Effects and the Timing of Retirement

When They're Sixty-Four: Peer Effects and the Timing of Retirement

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Abstract

This paper examines the effect of peers on an individual's likelihood of retirement using an administrative dataset of all retirement-eligible Los Angeles teachers for the years 1998-2001. We use two large unexpected pension reforms that differentially impacted financial incentives within and across schools to construct an instrument for others' retirement decisions. Controlling for individual and school characteristics, we find that the retirement of an additional teacher in the previous year at the same school increases a teacher's own likelihood of retirement by 1.5-2 percentage points. We then explore some possible mechanisms through which this effect operates. (JEL H75, I21, J14, J26, J45)

Citation

Brown, Kristine M., and Ron A. Laschever. 2012. "When They're Sixty-Four: Peer Effects and the Timing of Retirement." American Economic Journal: Applied Economics, 4 (3): 90-115. DOI: 10.1257/app.4.3.90

Additional Materials

JEL Classification

  • H75 State and Local Government: Health; Education; Welfare; Public Pensions
  • I21 Analysis of Education
  • J14 Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination
  • J26 Retirement; Retirement Policies
  • J45 Public Sector Labor Markets

Social Security and teachers

  • Posted by DOUGLAS A FOX
  • Posted on 7/9/2012 11:39:19 AM
You say that teachers in California are not covered by Social Security. Do you know if that is true of other states?

Re: Social Security and teachers

  • Posted by KRISTINE BROWN - Article Author
  • Posted on 7/10/2012 1:08:47 PM
Dear Dr. Fox - Thank you for your comment. This is an interesting topic. A state or local government agency is not required to participate in Social Security as long as it is providing a pension for its employees. As a result, some public employees in the U.S. are not covered by Social Security. Public school teachers are not covered in about a dozen states, including California.
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