A glance at the current issue of "The American Economic Review": Delayed retirement and the professoriate

Monday, December 2, 2002

In a study of retirement patterns among faculty members, Orley Ashenfelter and David Card look at whether the federal law against compulsory-retirement policies has affected the age composition of faculties at American colleges and universities. Congress granted postsecondary institutions a temporary exemption to the 1986 Age Discrimination in Employment Act, the authors explain, allowing colleges to enforce mandatory retirement at age 70. On January 1, 1994, the exemption expired, they write, and "the United States became one of the few countries in the world to offer true lifetime security to tenured faculty members."

Mr. Ashenfelter, a professor of economics at Princeton University, and Mr. Card, a professor of economics at the University of California at Berkeley, constructed a database of payroll and pension information for 16,000 older faculty members at 104 colleges and universities across the country over 10 to 11 years. Patterns in those data, they

write, suggest "that average retirement rates were very similar before and after 1994 for all ages other than 70 or 71," and that retirement rates at those ages fell drastically after the exemption expired.

In addition, the authors found evidence that faculty members "with higher salaries or lower pension wealth are less likely to retire at any given age," and that "retirement rates are also affected by a faculty member's 'relative' salary" within his or her institution.

The study reveals the need for further analysis, according to Mr. Ashenfelter and Mr. Card, particularly considering that their database may not reflect the changes that some institutions have made to their pension plans in response to the elimination of mandatory retirement. As enrollments and voluntary retirements increase, will colleges welcome the greater supply of faculty members offered by delayed retirement?
The issue, they conclude, deserves more attention.

The article is not online, but information about the journal is available at http://www.aeaweb.org/aer/

--Sarah J. Rees