Over the last two decades, twenty-two states have moved away from traditional defined benefit (DB) pension systems and toward pension plan structures like the defined contribution (DC) plans now prevalent in the private sector. Others are considering such a reform as it is seen as a means of limiting future pension funding risk. It is important to…

How much do teachers value compensation that is deferred until retirement? This question is important because the vast majority of public school teachers are covered by defined benefit (DB) pension plans that "backload" a large share of compensation to retirement relative to the compensation structure in the private sector. There is…

Defined benefit (DB) pension systems determine the size of pension payments using an employee's "final average salary". Thus, employees enrolled in DB pension systems face an incentive to "salary spike" -- strategically increase late career pensionable compensation -- to increase their retirement income. This is an important…

Many states enhanced benefits in teacher retirement plans during the 1990s. This paper examines the school staffing effects of one such enhancement in a major urban school district with mostly high poverty schools. Pension rule changes in 1999 for St. Louis public school teachers resulted in very large increases in pension wealth for active…

A vast research literature is devoted to analyzing causes of and potential remedies for early-career teacher attrition. However, much less attention has been paid to late-career attrition among experienced teachers, which is driven primarily by retirement plan incentives. Although there is some variation across states, it is generally the case…

Rising costs of public employee pension plans are a source of fiscal stress in many cities and states and have led to calls for reform. To assess the economic consequences of plan changes it is important to have reliable statistical models of employee retirement behavior. The authors estimate a structural model of teacher retirement using…

Most public school teachers in the United States are enrolled in defined benefit (DB) pension plans. Using administrative micro data from four states, combined with national pension funding data, we show these plans have accumulated substantial unfunded liabilities -- effectively debt -- owing to previous plan operations. On average across 49…

Public pension systems in many U.S. states face large funding shortfalls. Movement toward defined contribution (DC) pension structures may reduce the likelihood of future shortfalls. We address some limitations of the existing literature by studying public-sector employees who are enrolled in either a defined benefit (DB) plan or hybrid DB-DC…

We use data from workers in the largest public-sector occupation in the United States -- teaching -- to examine the effect of pension enhancements on employee retention. Specifically, we study a 1999 enhancement to the benefit formula for public school teachers in St. Louis that resulted in an immediate and dramatic increase in their incentives to…