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The Effects of Workforce-Shaping Incentives on Civil Service Retirement: Evidence from the Department of Defense

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Documented briefing

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The research summarized in this briefing estimates the effects of three compensation policies on the financial incentive to retire and on the probability of retirement. These policies are the special voluntary separation incentive program VSIP or buyout, the voluntary early retirement authority VERA or early retirement option, and the retention allowance. The first two programs are intended to increase the financial incentive to leave voluntarily, while the third is intended to increase the financial incentive to stay in the civil service. Both VSIP and VERA were used by federal agencies to reduce federal employment during the 1990s. These programs induced voluntary separations among workers who would otherwise have been involuntarily separated because they worked in organizations that were identified for possible downsizing. Between 1993 and 1999, the Department of Defense DoD paid about 141,000 VSIP buyouts to its civilian employees to support its post-cold war drawdown. The General Accounting Office 2001a and the U,S, Senate Committee on Government Affairs 2001 have argued that downsizing resulted in a federal workforce that has a skill and experience mix that is out of balance with the mission of federal agencies. Both VSIP and VERA have been identified by the Office of Personnel Management OPM as tools to help federal managers shape the experience and skill mixes of their workforces U.S. Office of Personnel Management, 2001b. By providing federal workers with an incentive to retire early or separate, it is hoped that managers will be better able to hire or even outsource replacement workers with different skills or experience levels.

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  • Personnel Management and Labor Relations

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