Pensions and Public School Teacher Retirement

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    RESEARCH DIALOGUEIssue no. 99JANUARY 2011

    PENSIONS AND PUBLIC SCHOOL TEACHER RETIREMENTAN ANALYSIS USING NATIONAL TEACHER DATA

    Leora Friedberg

    University of Virginia and TIAA-CREF

    Sarah Turner

    University of Virginia and NBER

    ABSTRACT

    The views and opinions in this paper are solely those of the authors a

    do not necessarily represent those of TIAA-CREF or the TIAA-CREF Institu

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    1. INTRODUCTION

    1 Costrell and Podgurskys (2009) survey on teacher retirement notes only one published econometric study on teacher pensions and turnover

    (Ferguson et al 2006).

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    2.1 MEASURING DB PENSION ACCRUALS

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    2.2 ESTIMATING THE EFFECT OF DB PENSION WEALTH ACCRUALS ON RETIREMENT

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    2.3 DB PENSIONS AND TEACHER RETIREMENT

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    2.4 TEACHER STAFFING ISSUES

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    3. EMPIRICAL APPROACH

    3.1 ECONOMETRIC SPECIFICATION

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    3.2 TEACHER DATA

    3.3 PENSION PLAN DATA

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    4. ESTIMATION RESULTS

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    5. CONCLUSIONS

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    REFERENCES

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    TABLE 1: SAMPLE STATISTICS, SCHOOLS AND STAFFING SURVEY OF 1999 AND 2003 AND

    TEACHER FOLLOW-UP SURVEY OF 2000 AND 2004

    1999-2000 2003-2004

    MEAN STD. DEV. MEAN STD. DEV.

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    TABLE 2: OLS REGRESSION RESULTS

    DEPENDENT VARIABLE: 1 IF TEACHER RETIRES, 0 IF TEACHERS CONTINUES WORKING

    2000 LEAVERS 2004 LEAVERS

    (1) (2) (3) (4)

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    FIGURE 1

    PENSION WEALTH AND ACCRUAL UNDER THE TEACHER RETIREMENT SYSTEM OF TEXAS

    PANEL A: PENSION WEALTH

    PANEL B: PENSION WEALTH ACCRUAL

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    FIGURE 2

    PENSION WEALTH AND ACCRUAL UNDER A DEFINED BENEFIT AND DEFINED CONTRIBUTION PLAN FROM THE HRS

    PANEL A: PENSION WEALTH

    PANEL B: PENSION WEALTH ACCRUAL

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    FIGURE 3

    AGE DISTRIBUTION OF ELEMENTARY AND SECONDARY SCHOOL TEACHERS

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    FIGURE 4

    THE AGE DISTRIBUTION OF THOSE WHO STAY IN THEIR JOB (STAYERS) AND THOSE WHO RETIRE (LEAVERS)

    IN OUR TFS SAMPLE.

    A: 2000 TFS

    B. 2004 TFS

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    FIGURE 5. PERCENTAGE OF TEACHERS WHO STAY IN THEIR JOB (STAYERS) AND WHO RETIRE (LEAVERS)

    IN OUR TFS SAMPLE, BY SATISFACTION LEVELS

    A: 2000 TFS

    B: 2004 TFS

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    A: TEACHER HIRED AT AGE 23 IN GEORGIA

    C: TEACHER HIRED AT AGE 30 IN NEW YORK

    E: TEACHER HIRED AT AGE 30 IN TEXAS

    B: TEACHER HIRED AT AGE 30 IN GEORGIA

    D: TEACHER HIRED AT AGE 30 IN MICHIGAN

    F: TEACHER HIRED AT AGE 40 IN TEXAS

    FIGURE 6

    PENSION WEALTH IN SELECTED STATES FOR HYPOTHETICAL TEACHERS

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    A. MASSACHUSETTS

    C. ALABAMA

    B. VIRGINIA

    D. OHIO

    FIGURE 7

    DISTRIBUTION OF PENSION PEAK VALUE, OBSERVED FOR TEACHERS IN SELECTED STATES IN THE SASS