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

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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
FullText Text:
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  Data: Intergovernmental (Dis)incentives, Free-Riding, Teacher Salaries and Teacher Pensions. Upjohn Institute Working Paper No. 15-220
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  Data: 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
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  Data: <searchLink fieldCode="DE" term="%22Teacher+Salaries%22">Teacher Salaries</searchLink><br /><searchLink fieldCode="DE" term="%22Retirement+Benefits%22">Retirement Benefits</searchLink><br /><searchLink fieldCode="DE" term="%22Incentives%22">Incentives</searchLink><br /><searchLink fieldCode="DE" term="%22Public+Schools%22">Public Schools</searchLink><br /><searchLink fieldCode="DE" term="%22Employees%22">Employees</searchLink><br /><searchLink fieldCode="DE" term="%22Compensation+%28Remuneration%29%22">Compensation (Remuneration)</searchLink><br /><searchLink fieldCode="DE" term="%22Individual+Characteristics%22">Individual Characteristics</searchLink><br /><searchLink fieldCode="DE" term="%22Teacher+Retirement%22">Teacher Retirement</searchLink><br /><searchLink fieldCode="DE" term="%22State+Legislation%22">State Legislation</searchLink><br /><searchLink fieldCode="DE" term="%22Government+Role%22">Government Role</searchLink><br /><searchLink fieldCode="DE" term="%22Local+Government%22">Local Government</searchLink><br /><searchLink fieldCode="DE" term="%22State+Boards+of+Education%22">State Boards of Education</searchLink><br /><searchLink fieldCode="DE" term="%22Age+Differences%22">Age Differences</searchLink><br /><searchLink fieldCode="DE" term="%22School+Personnel%22">School Personnel</searchLink><br /><searchLink fieldCode="DE" term="%22State+Policy%22">State Policy</searchLink><br /><searchLink fieldCode="DE" term="%22Labor+Turnover%22">Labor Turnover</searchLink><br /><searchLink fieldCode="DE" term="%22Statistical+Analysis%22">Statistical Analysis</searchLink>
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  Data: <searchLink fieldCode="DE" term="%22Illinois%22">Illinois</searchLink>
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  Data: 10.17848/wp15-220
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  Data: 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.
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        Value: 10.17848/wp15-220
    Languages:
      – Text: English
    PhysicalDescription:
      Pagination:
        PageCount: 57
    Subjects:
      – SubjectFull: Teacher Salaries
        Type: general
      – SubjectFull: Retirement Benefits
        Type: general
      – SubjectFull: Incentives
        Type: general
      – SubjectFull: Public Schools
        Type: general
      – SubjectFull: Employees
        Type: general
      – SubjectFull: Compensation (Remuneration)
        Type: general
      – SubjectFull: Individual Characteristics
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      – SubjectFull: Teacher Retirement
        Type: general
      – SubjectFull: State Legislation
        Type: general
      – SubjectFull: Government Role
        Type: general
      – SubjectFull: Local Government
        Type: general
      – SubjectFull: State Boards of Education
        Type: general
      – SubjectFull: Age Differences
        Type: general
      – SubjectFull: School Personnel
        Type: general
      – SubjectFull: State Policy
        Type: general
      – SubjectFull: Labor Turnover
        Type: general
      – SubjectFull: Statistical Analysis
        Type: general
      – SubjectFull: Illinois
        Type: general
    Titles:
      – TitleFull: Intergovernmental (Dis)incentives, Free-Riding, Teacher Salaries and Teacher Pensions. Upjohn Institute Working Paper No. 15-220
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