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Title:Adverse selection and incentives in an early retirement program PDF Logo
Authors:Whelan, Kenneth T.
Ehrenberg, Ronald G.
Hallock, Kevin F.
Seeber, Ronald L.
Issue Date:2011
Series/Report no.:Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6055
Abstract:We evaluate potential determinants of enrollment in an early retirement incentive program for non-tenure-track employees at a large university. Using administrative records on the eligible population of employees not covered by collective bargaining agreements, historical employee count and layoff data by budget units, and public information on unit budgets, we find dips in per-employee finances in a budget unit during the application year and higher recent per employee layoffs were associated with increased probabilities of eligible employee program enrollment. Our results also suggest that, on average, employees whose salaries are lower than we would predict given their personal characteristics and job titles were more likely to enroll in the early retirement program. To the extent that employees' compensation reflect their productivity, as it should under a pay system in which annual salary increases are based on merit, this finding suggests that adverse selection was not a problem with the program. That is, we find no evidence that on average the most productive employees took the incentive.
Subjects:retirement incentive program
adverse selection
layoff threat
university
JEL:I23
J26
Persistent Identifier of the first edition:urn:nbn:de:101:1-201111029413
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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