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Early Retirement Payoff: Incentive Programs for Veteran Teachers May Boost Student Achievement

July 2014

Maria D. Fitzpatrick, Michael F. Lovenheim


In light of tightening budgets, many school districts offer incentives for teachers in the advanced stages of their careers to retire early. The authors want to know if offering early retirement to teachers boosts student achievement. The effect would come from hiring new, energetic teachers with more modern teaching practices. An early retirement program in Illinois offered a natural experiment to examine the effects of offering incentives for teachers to retire early.

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Policy Implications

Early teacher retirement plans are useful for boosting test scores, particularly in schools that serve the most disadvantaged students. If these plans are implemented, though, they will likely not save taxpayers any money due to the costs of the retirement plans for those same teachers. It can reduce salary costs if the incoming teacher is paid at an entry-level rate compared to the salary of the experienced teacher.

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