Pension-spiking, free-riding, and the effects of pension reform on teachers' earnings

• 成果类型: Article
• 署名作者: Fitzpatrick, Maria D.
• 署名单位: National Bureau of Economic Research; Cornell University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2017.02.007
• 发表日期: 2017
• 页码: 57-74
• 关键词: Intergovernmental incentives; Teacher compensation; Teacher retirement

摘要

In many states, local school districts are responsible for setting the earnings that determines the size of pensions, but are not required to make contributions to cover the resulting state pension fund liabilities. In this paper, I document evidence that this intergovernmental incentive inherent in public sector defined benefit pension systems distorts the amount and timing of income for public school teachers. I use the introduction of a policy that required experience-rating on earnings increases above a certain limit in a differences-in-differences framework to identify whether districts are willing to pay the full costs of their earnings promises. Because of the design of the policy, overall earnings of teachers near retirement did not change. Instead, districts that previously provided one-time pay increases shifted to smaller increments spread out over several years. In addition, some districts that did not practice pension-spiking prior to the reform appear to begin providing payments up to the new, lower limit, perhaps due to increased salience of the fiscal incentive. Therefore, the policy was ineffective at decreasing pension costs. (C) 2017 Elsevier B.V. All rights reserved.