Presentation on theme: "1 Teacher Pensions and Labor Market Behavior: A Descriptive Analysis Michael Podgursky, University of Missouri - Columbia Mark Ehlert, University of Missouri-"— Presentation transcript:
1 Teacher Pensions and Labor Market Behavior: A Descriptive Analysis Michael Podgursky, University of Missouri - Columbia Mark Ehlert, University of Missouri- Columbia IES Research Conference Washington, DC June 8, 2007.
2 Why study teacher retirements? Teacher retirements generate vacancies Teacher retirements generate costs –Teacher pensions –Retiree health insurance Incentives in retirement systems have strong effects on labor supply and mobility –Pension system incentives are potent Retirement systems can affect the quantity and quality of the teaching workforce
3 Schools face 'death spiral' Editorial/Opinion 2/14/2006 Until last week, Los Angeles school officials had thought their unfunded health care obligation for retirees was $5 billion. Then they scrubbed the numbers. The new estimate: $10 billion. That's bad news for taxpayers who will foot the bill and for children whose education will be limited by the cost. …
5 Research literature Large labor economics literature on pensions and retirements Very small literature on teachers –Furgeson, Strauss, Vogt (2006), PA teachers –Brown (2006), CA teachers Absence of basic data –Payroll costs (esp. retiree HI) –Parameters of systems (NEA and NASRA incomplete) –Incentive structure of teacher pensions –Teacher labor market data SASS TFS State studies (SEA records linked to pension data)
6 Incentives in Pension Systems In public sector DB pension systems accrual of pension wealth is highly non- linear and back-loaded State systems generally have sharp “spikes” in accrual rates –Pull teachers to spike –Push out after Not inherent in DB pension systems. – “cash balance” (IBM and other firms)
7 Increment to PV of Pension Wealth from Working an Additional Year Source: Costrell and Podgursky (2007) “Spikes” are common Loss of Pension Wealth