Title: Teacher Pensions and Labor Market Behavior:
1Teacher 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.
2Why 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
3Research 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)
4Source Harris and Adams (2007)
5Teacher 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)
6Incentives 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
7Typical DB teacher pension
Annual Pension S x FAS x r(S,A) S service
years FAS final average salary r(S,A)
replacement factor
8Lots 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) )
10Increment to PV of Pension Wealth from Working an
Additional Year Missouri
11Source Costrell and Podgursky (2007)
12Source Costrell and Podgursky (2007)
13Source Costrell and Podgursky (2007)
14(No Transcript)
15Ohio
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17Missouri 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
18Distribution of Age Experience
80
19Distribution of Age
20Distribution of Experience
29
21Cumulative Distribution of Retirement Age Male
vs Female
Median 56 males, 57 females
22Cumulative Distribution of Retirement Age
Rural vs Urban
23Cumulative Distribution of Retirement Age
White vs Black
24Cumulative Distribution of Retirement Age High
and Low Achieving Schools
25Cumulative Distribution of Retirement Age
Elementary vs Secondary
26Increment 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
27Distribution of Years of Experience at Retirement
Before and After 2001 Change In Replacement Rate
28(No Transcript)
29Distribution of ln (salary)
30Distribution of ln (salary)
Distribution of ln (pension wealth)
31Retired
- Retired (Collecting teacher pension)
- Retired and not teaching
- Double Dipping
- DROP
- withdrawal
- change pension systems
- part time teaching
32Cumulative Distribution of Teacher Retirement
Ages Teacher Follow Up Surveys, Schools and
Staffing Surveys, 2001 and 2005
Retired collecting pension and not teaching
58
33Retirement Age in Missouri and the US Missouri
and SASS Teacher Follow Up Survey 2001.
34Labor Market Experience of Teachers Who Retired
in 2000 Percent of Teachers Working Full and
Part-Time in Missouri Public Schools in
Subsequent Years
35Structure 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
36Lesson Total Compensation Current Deferred
Compensation
37- Papers at www.caldercenter.org
- Slides at http//economics.missouri.edu/
- Ohio report www.edexcellence.net