Cover: Teacher Pension Workshop: Connecting Evidence-Based Research to Pension Reform

Teacher Pension Workshop: Connecting Evidence-Based Research to Pension Reform

Pay For Seniority: Do Back-Loaded Retirement Benefits Retain Government Employees?

Published May 17, 2018

by Laura D. Quinby

Download eBook for Free

FormatFile SizeNotes
PDF file 0.4 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

This study explores the effect of seniority pay on employee retention in the U.S. public sector. State-government employees in Michigan transitioned from a defined-benefit pension with 10-year vesting to a defined-contribution plan with immediate vesting. Participation in either plan depends on date of hire, permitting a regression-discontinuity research design. The shift away from back-loaded retirement benefits caused an eight percentage-point decrease in the probability of remaining in state service to earn 10 years of tenure. The probability of leaving with four to nine years of tenure increased commensurately. Older, highly educated workers were highly responsive to retirement-plan incentives, whereas younger workers did not adjust their labor supply.

This research was conducted by RAND Education.

This report is part of the RAND working paper series. RAND working papers are intended to share researchers' latest findings and to solicit informal peer review. They have been approved for circulation by RAND but may not have been formally edited or peer reviewed.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.