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Teacher pension enhancements and staffing in an urban school district

Published online by Cambridge University Press:  21 June 2021

Shawn Ni ,
Michael Podgursky  and
Xiqian Wang
Shawn Ni
Affiliation:
Department of Economics, University of Missouri-Columbia, Columbia, MO, USA
Michael Podgursky*
Affiliation:
Department of Economics, University of Missouri-Columbia, Columbia, MO, USA
Xiqian Wang
Affiliation:
School of Economics and Management, Beijing University of Technology, Beijing, China
*
*Corresponding author. Email: podgurskym@missouri.edu
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Abstract

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 large increases in pension wealth for active teachers, as well as a powerful increase in ‘push’ incentives for earlier retirement. Simple descriptive statistics on retirement patterns before and after the enhancements suggest much earlier retirement resulted. Shorter teaching spells imply a steady state with more teacher turnover and a larger share of novice teachers in classrooms. To better understand the long-run effects of these changes and alternative policies, the authors estimate a structural model of teacher retirement. Simulations of retirement behavior for representative senior teachers point to shorter completed teaching spells and earlier retirement age as a result of the enhancements. By contrast, moving from the post-1999 to a DC-type plan would extend the teaching career of a representative senior teacher by roughly two years.

Keywords

State and local pension financeteacher pensionsteacher compensation

JEL classification

H72: State and Local Budget and Expenditures J32: Nonwage Labor Costs and Benefits • Retirement Plans • Private Pensions J26: Retirement • Retirement Policies
Type
Article
Information
Journal of Pension Economics & Finance , Volume 21 , Issue 4 , October 2022 , pp. 613 - 633
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

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