Working Papers Series

Papers below are in pdf.

Michael Podgursky

WP 11-15
Pension-Induced Rigidities in the Labor Market for School Leaders
Cory Koedel, Jason A. Grissom, Shawn Ni & Michael Podgursky

Educators in public schools in the United States are typically enrolled in defined-benefit pension plans, which penalize across-plan mobility. We use administrative data from Missouri to examine how the mobility penalties affect the labor market for school leaders. We show that pension borders greatly affect leadership flows across schools – for two groups of schools separated by a pension border, our estimates indicate that removing the border will increase leadership mobility between them by 97 to 163 percent. We consider the implications of the pension-induced rigidities in the leadership labor market for schools near pension borders in Missouri. Our findings are of general interest given that thousands of public schools operate near pension boundaries nationwide.

JEL Codes: H5, I2, J3
Keywords: Educator pensions, backloaded compensation, principal quality, leadership quality, compensation in education

WP 11-11
Teacher Pension Incentives and the Timing of Retirement
Shawn Ni and Michael Podgursky

The rising costs and large unfunded liabilities of defined benefit (DB) teacher retirement systems raise questions about their efficacy and viability. Reform of teacher pension plans depends critically on reliable predictions of behavioral responses to alternative pension rules. We estimate an option-value model of individual teacher retirement using administrative data for Missouri teachers. The model fits the observed aggregate retirement behavior very well. We use the estimated structural parameters to simulate retirement behavior under alternative pension rules. Our simulations show that on net the enhancements of Missouri teacher pension benefits in the 1990's lowered the average retirement age for teachers. Conversion from the current DB plan to a defined contribution (DC) plan would have the opposite effect, and would dampen "spikes" in teacher retirement timing. The 1990's enhancements raised welfare for all teachers, however, the DC plan that we simulate has a mixed welfare impact, raising welfare for teachers near retirement but reducing it for teachers with less experience.

JEL Codes: H30, I22, J26, J38
Keywords: teacher pensions, school staffing, school finance.

WP 11-09
Teacher Pension Systems, the Composition of the Teaching Workforce,
and Teacher Quality
Cory Koedel & Michael Podgursky

Teacher pension systems impose large penalties on individuals who separate too soon or remain employed too long. The penalties result in the retention of some teachers who would otherwise choose to leave, and the premature exit of some teachers who would otherwise choose to stay. We examine how these compositional effects of teacher pension systems influence the quality of the teaching workforce, conditional on individuals who initially select into teaching. We find no evidence that the pull and push incentives raise teacher quality, and if anything, we find modest negative effects. Our results support future experimentation with compensation schemes for educators that are not so heavily backloaded.

JEL Codes: I20, J30, J45
Keywords: Educator Pensions, Teacher Pensions, Backloaded Compensation, Teacher Pensions and Teacher Quality, Teacher Compensation, Selection into Teaching

WP 06-01
Is Teacher Pay “Adequate”?
Michael Podgursky

In school finance lawsuits plaintiffs often claim that pay levels are not sufficient to recruit teachers who can deliver constitutionally-mandated levels of educational services. In this paper I consider several ways in which one might bring economic theory and data to bear on that question. I conclude that at present, and at least for the near term, education research cannot prescribe an “adequate” level of school spending on teachers, whether in the form of pay, benefits, or professional training, that can reliability predict a target level of student performance. If courts are predisposed to intervene in this matter, a more reasonable standard for “adequacy” is whether available revenues, when spent in an efficient manner, are sufficient to staff classrooms with appropriately-certified teachers in a flexible licensing regime that satisfies both state and federal teacher quality standards.

JEL Codes: I2, J3
Keywords: Teacher compensation, School finance