Do Benefit Cuts Encourage Public Employees to Leave?

SLP#65

The brief’s key findings are:

  • Financially troubled state and local pensions may need to cut benefits for current workers, but such cuts could also induce some workers to leave.
  • To assess this human resource impact, the analysis looks at a 2005 reform in Rhode Island that reduced benefits for some current workers.
  • The results show that the affected employees were significantly more likely to leave the government over the next four years.
  • Although the direct cost of hiring new workers was relatively small, governments should consider how losing skilled workers affects the quality of public services.

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