# Presentation: 162610

## Teacher Pensions and Labor Market Behavior:

**A Descriptive Analysis**
- Michael Podgursky,  University of Missouri - Columbia
- Mark Ehlert, University of Missouri- Columbia

- IES Research Conference
- Washington, DC June 8, 2007.

## Why study teacher retirements?

- Teacher retirements generate vacancies
- Teacher retirements generate costs
- Teacher pensions
- Retiree health insurance
- Incentives in retirement systems have strong effects on labor supply and mobility
- Pension system incentives are potent
- Retirement systems can affect the quantity and quality of the teaching workforce

## Schools face 'death spiral' 

**Editorial/Opinion**
**2/14/2006**
- Until last week, Los Angeles school officials had thought their unfunded health care obligation for retirees was $5 billion. Then they scrubbed the numbers. The new estimate: $10 billion. That's bad news for taxpayers who will foot the bill and for children whose education will be limited by the cost.
- ...

## Slide 4

## Research literature

- Large labor economics literature on pensions and retirements
- Very small literature on teachers
- Furgeson, Strauss, Vogt (2006), PA teachers
- Brown (2006), CA teachers
- Absence of basic data
- Payroll costs (esp. retiree HI)
- Parameters of systems (NEA and NASRA incomplete)
_*Incentive structure of teacher pensions*_
- Teacher labor market data
- SASS TFS
- State studies (SEA records linked to pension data)

## Incentives in Pension Systems	

- In public sector DB pension systems accrual of pension wealth is highly non-linear and back-loaded
- State systems generally have sharp “spikes” in accrual rates
*Pull* teachers to spike
*Push out* after
- Not inherent in DB pension systems.
-  “cash balance” (IBM and other firms)

## “Spikes” are common

- Increment to PV of Pension Wealth from Working an Additional Year

- Source:  Costrell and Podgursky (2007)

- “Spikes” are common

- Loss of Pension
- Wealth

## Source:  Costrell and Podgursky (2007)

## Source:  Costrell and Podgursky (2007)

## Source:  Costrell and Podgursky (2007)

## Ohio

## Missouri Longitudinal Teacher Data File

- 1990-91
- A + E ≥ 45
- Full-Time
- Teachers
- N= 31,060

- 2005-06

**21,240**
**Retirements**

## Distribution of Age + Experience

- 80

**Distribution of Age + Experience**

## Distribution of Age

**Distribution of Age**

## Distribution of Experience

- 29

**Distribution of Experience**

## Cumulative Distribution of Age:  Male vs Female

**Cumulative Distribution of Age:  Male vs Female**

## Cumulative Distribution of Age:  Rural vs Urban

**Cumulative Distribution of Age:  Rural vs Urban**

## Cumulative Distribution of Age:  White vs Black

**Cumulative Distribution of Age:  White vs Black**

## Cumulative Distribution of Age:  Elementary vs Secondary

**Cumulative Distribution of Age:  Elementary vs Secondary**

## Structure of 2000-01 SASS Teacher Follow Up Survey

- Collecting Teacher
- Retirement Pension

## Age at Retirement:  

**SASS Teacher Follow Up Survey, 2001 and 2005**

- Median = 58

## Teaching Experience at Retirement:  

**SASS Teacher Follow Up Survey, 2001 and 2005**

## 58

**Teacher Follow Up Surveys, Schools and Staffing Surveys, 2001 and 2005**

## Retirement Age in Missouri and the US:

- Missouri and SASS Teacher Follow Up Survey 2001.

## Labor Market Experience of Teachers Who Retired in 2000:

**Percent of Teachers Working Full and Part-Time in Missouri **
**Public Schools in Subsequent Years**

## Retirement Age in Missouri and the US:

**Missouri and SASS Teacher Follow Up Survey 2001.**

## Structure of 2003-04 SASS Teacher Follow Up Survey

- SASS
- Teacher
- Follow-Up
- Survey
- 2003-04

- Current
- Teacher
- Survey

- Former
- Teacher
- Survey

- Collecting Teacher Pension?

**5.3%**
**(4.9% of total pop.)**

**91.6%**

**8.4%**

- Full paper at _[www.caldercenter.org](http://www.caldercenter.org/)_