View in EDS

Intergovernmental (Dis)incentives, Free-Riding, Teacher Salaries and Teacher Pensions. Upjohn Institute Working Paper No. 15-220

Saved in:
Bibliographic Details
Title: Intergovernmental (Dis)incentives, Free-Riding, Teacher Salaries and Teacher Pensions. Upjohn Institute Working Paper No. 15-220
Language: English
Authors: Fitzpatrick, Maria D., W.E. Upjohn Institute for Employment Research
Source: W. E. Upjohn Institute for Employment Research. 2015.
Availability: W. E. Upjohn Institute for Employment Research. 300 South Westnedge Avenue, Kalamazoo, MI 49007-4686. Tel: 888-227-8569; Tel: 269-343-4330; Fax: 269-343-7310; Web site: http://www.upjohninstitute.org
Peer Reviewed: N
Page Count: 57
Publication Date: 2015
Document Type: Reports - Research
Descriptors: Teacher Salaries, Retirement Benefits, Incentives, Public Schools, Employees, Compensation (Remuneration), Individual Characteristics, Teacher Retirement, State Legislation, Government Role, Local Government, State Boards of Education, Age Differences, School Personnel, State Policy, Labor Turnover, Statistical Analysis
Geographic Terms: Illinois
DOI: 10.17848/wp15-220
Abstract: In this paper, I document evidence that intergovernmental incentives inherent in public sector defined benefit pension systems distort the amount and timing of income for public school teachers. This intergovernmental incentive stems from the fact that, in many states, local school districts are responsible for setting the compensation that determines the size of pensions, but are not required to make contributions to cover the resulting pension fund liabilities. I use the introduction of a policy that required experience-rating on compensation increases above a certain limit in a differences-in-differences framework to identify whether districts are willing to pay the full costs of their compensation promises. In response to the policy, the size and distribution of compensation changed significantly. On average, public school employees received lower wages largely through the removal of retirement bonuses. However, the design of the policy led some districts to increase compensation, rendering the policy less effective than it might have otherwise been. The following tables are appended: (1) Characteristics of Employees of Illinois Public Schools in the Analysis Sample, 2003-2011; and (2) District Characteristics in 2005, by Survey Response.
Abstractor: As Provided
Number of References: 21
Entry Date: 2015
Accession Number: ED559205
Database: ERIC
Description
Abstract:In this paper, I document evidence that intergovernmental incentives inherent in public sector defined benefit pension systems distort the amount and timing of income for public school teachers. This intergovernmental incentive stems from the fact that, in many states, local school districts are responsible for setting the compensation that determines the size of pensions, but are not required to make contributions to cover the resulting pension fund liabilities. I use the introduction of a policy that required experience-rating on compensation increases above a certain limit in a differences-in-differences framework to identify whether districts are willing to pay the full costs of their compensation promises. In response to the policy, the size and distribution of compensation changed significantly. On average, public school employees received lower wages largely through the removal of retirement bonuses. However, the design of the policy led some districts to increase compensation, rendering the policy less effective than it might have otherwise been. The following tables are appended: (1) Characteristics of Employees of Illinois Public Schools in the Analysis Sample, 2003-2011; and (2) District Characteristics in 2005, by Survey Response.
DOI:10.17848/wp15-220