Peer Effects and the Timing of Retirement

Abstract

We examine the effect of peers on an individual’s likelihood of retirement using data from the Los Angeles Unified School District. Using an administrative dataset of the full population of district teachers ages 55 and over, for the years 1997 to 2001 (n =31,931), we construct school-level peer groups. We instrument for others’ retirement using two large pension reforms that differentially impacted the financial incentives for retirement within and across schools. Controlling for individual and school characteristics, and including individual fixed effects, our instrumental-variable estimates of the effect of colleagues’ retirement on a teacher’s own likelihood of retirement are sizable and statistically significant.