Working Paper: NBER ID: w19563
Authors: John B. Shoven; Sita Slavov
Abstract: Most private sector workers with employer-provided health insurance have a strong incentive to continue working until Medicare eligibility in order to maintain group health coverage. However, most government employees have access to retiree health coverage, which allows them access to group health coverage even if they retire before Medicare eligibility. We study the impact of retiree health coverage on the probability of stopping work among public sector workers between the ages of 55 and 64. We find that, for state and local government employees, retiree health coverage raises the probability of stopping work by 5.1 percentage points (around 28 percent) between ages 60 and 64. However, we find no evidence that retiree health coverage influences state and local employees' decisions to stop work at ages 55-59, or that such coverage has an effect on the probability of stopping work for federal and military employees.
Keywords: retiree health insurance; early retirement; public sector employees
JEL Codes: I1; J2; J3; J4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Retiree health coverage (I13) | Probability of stopping work for state and local public sector employees aged 60-64 (J26) |
| Retiree health coverage (I13) | Job exit rate for private sector employees (J63) |
| Lack of employer-provided health insurance (I13) | Probability of stopping work for public sector employees aged 55-59 (J26) |
| Retiree health coverage (I13) | Job exit decisions of federal and military employees (J45) |
| Controlling for pension wealth and defined benefit pension status (J32) | Measured effect of retiree health coverage (J32) |