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Teacher Pensions and Labor Market Behavior:

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Teacher Pensions and Labor Market Behavior: A Descriptive Analysis Michael Podgursky, University of Missouri - Columbia Mark Ehlert, University of Missouri- Columbia – PowerPoint PPT presentation

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Title: Teacher Pensions and Labor Market Behavior:


1
Teacher Pensions and Labor Market Behavior A
Descriptive Analysis Michael Podgursky,
University of Missouri - Columbia Mark Ehlert,
University of Missouri- Columbia Robert
Costrell, University of Arkansas
Fayetteville Center for Analysis of Longitudinal
Data in Education Research (CALDER)
CALDER Data Conference Washington, DC October
4, 2007.
2
Why study teacher retirements?
  • Teacher retirements generate vacancies
  • Teacher retirements generate costs
  • Teacher pensions
  • Retiree health insurance
  • Incentives in retirement systems may have
    significant effects on labor supply and mobility
  • Pension system incentives are large
  • Retirement systems can affect the quantity and
    quality of the teaching workforce

3
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
  • Harris and Adams(2007), CPS
  • Absence of basic data
  • Type of benefits and costs (esp. retiree HI)
  • Parameters of systems (NEA, NASRA, Loeb and
    Miller, 2006)
  • Incentive structure of teacher pensions
  • Teacher labor market data
  • SASS TFS
  • Longitudinal state data (SEA records linked to
    pension data)

4
Source Harris and Adams (2007)
5
Teacher Pensions Some Stylized Facts
  • Mostly state-wide systems
  • Roughly 70 percent of teachers are in Social
    Security. Generally state decision.
  • Nearly all (vested) teachers are in Defined
    Benefit plans. DC and CB options limited
  • Mean retirement age is well below Social Security
    and Medicare ages
  • 58 years (retired and stopped teaching, SASS TFS)

6
Incentives in Teacher 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)
  • Can smooth spikes

7
Typical DB teacher pension
Annual Pension S x FAS x r(S,A) S service
years FAS final average salary r(S,A)
replacement factor
8
Lots of moving parts
9
  • Compute pension wealth at each year of work life
  • Compute growth of pension wealth from an
    additional year of work
  • Representative teacher
  • Enters at 25, continuous spell of work
  • Standard assumptions concerning PV of pension
    wealth. (see Costrell and Podgursky (2007) )

10
Increment to PV of Pension Wealth from Working an
Additional Year Missouri
11
Source Costrell and Podgursky (2007)
12
Source Costrell and Podgursky (2007)
13
Source Costrell and Podgursky (2007)
14
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15
Ohio
16
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17
Missouri Longitudinal Teacher Data
File (excluding KC and STL districts)
2005-06
1990-91 A E 45 Full-Time Teachers N 31,060
21,240 Retirements
18
Distribution of Age Experience
80
19
Distribution of Age
20
Distribution of Experience
29
21
Cumulative Distribution of Retirement Age Male
vs Female
Median 56 males, 57 females
22
Cumulative Distribution of Retirement Age
Rural vs Urban
23
Cumulative Distribution of Retirement Age
White vs Black
24
Cumulative Distribution of Retirement Age High
and Low Achieving Schools
25
Cumulative Distribution of Retirement Age
Elementary vs Secondary
26
Increment to PV of Pension Wealth from Working an
Additional Year Missouri
r 2.5 S 30 r 2.55 S 31 Changed in
July 2001
27
Distribution of Years of Experience at Retirement
Before and After 2001 Change In Replacement Rate
28
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29
Distribution of ln (salary)
30
Distribution of ln (salary)
Distribution of ln (pension wealth)
31
Retired
  • Retired (Collecting teacher pension)
  • Retired and not teaching
  • Double Dipping
  • DROP
  • withdrawal
  • change pension systems
  • part time teaching

32
Cumulative Distribution of Teacher Retirement
Ages Teacher Follow Up Surveys, Schools and
Staffing Surveys, 2001 and 2005
Retired collecting pension and not teaching
58
33
Retirement Age in Missouri and the US Missouri
and SASS Teacher Follow Up Survey 2001.

34
Labor Market Experience of Teachers Who Retired
in 2000 Percent of Teachers Working Full and
Part-Time in Missouri Public Schools in
Subsequent Years
35
Structure of 2004-05 SASS Teacher Follow Up
Survey
5.3 (4.9 of total pop.)
91.6
Current Teacher Survey
Collecting Teacher Pension?
SASS Teacher Follow-Up Survey 2003-04
8.4
Former Teacher Survey
36
Lesson Total Compensation Current Deferred
Compensation
37
  • Papers at www.caldercenter.org
  • Slides at http//economics.missouri.edu/
  • Ohio report www.edexcellence.net
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