Labor market aspects of state and local retirement plans: a review of evidence and a blueprint for future research Apr 12, 2011 By Leora Friedberg Labor market aspects of state and local retirement plans: a review of evidence and a blueprint for future research Traditional defined benefit (DB) pension plans remain the overwhelming norm for teachers, policemen and other employees of state and local governments. The incentives for workers with DB pension plans to stay in their jobs shift dramatically over the course of their careers. Moreover, limited transferability of pension wealth across states and between public and private jobs impedes mobility in the labor market. Yet, little is known about the labor market effects of pensions on state and local government workers. The literature on private-employer pensions has made contributions on some of these fronts in recent years that can shed light on policy concerns raised by the possibility that pension plans will be modified in coming years. Moreover, some of the limitations constraining research on pensions may be overcome by focusing on government workers, with recent work on public school teachers pointing the way. Very recent studies are finding strong retirement responses to age- and tenure-related incentives built into state pension plans. Journal of Pension Economics and Finance Journal of Pension Economics and Finance Leora Friedberg Leora Friedberg is an associate professor of economics and public policy at the Batten School and an associate professor and Vice Chair at UVA's Department of Economics. Her focus is on labor economics, including research on social security, aging and retirement economic impacts. Read full bio Related Content Leora Friedberg Pensions and K-12 Teacher Retirement: An Analysis Using National Teacher Data Research The retirement security landscape has changed drastically for most workers over the last thirty years – except for public school teachers and other state and local government employees. Many private-sector employers have stopped offering traditional retirement plans, while most state and local employees remain covered by defined benefit (DB) pension plans. Labor Market Effects of Pensions and Implications for Teachers Research While the retirement security landscape has changed drastically for most workers over the last twenty years, traditional defined benefit (DB) pension plans remain the overwhelming norm for K–12 teachers. Because DB plans pay off fully with a fixed income after retirement only if a teacher stays in the profession for decades and yield little or nothing if a teacher leaves early, DB plans induce a strong, nonlinear relationship between years of tenure and benefit accrual.