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Teacher labor markets
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 little evidence, other than Fitzpatrick (2015), however, about whether DB pensions are consistent with teacher preferences for current and deferred compensation. This study examines a unique setting in Washington State, where teachers enroll in a hybrid, DB-Defined Contribution (DC) pension system, and have choices over their DC contribute rate. These choices reveal
preferences about the value teachers place on current versus retirement compensation. We find that teachers choose to contribute an average of 8.18 percent, significantly more than the minimum required contribution of 5 percent. This suggests that teachers value retirement compensation significantly more than previously estimated by Fitzpatrick. Potential explanations for the difference in findings from prior evidence are discussed, including estimation strategies, differences in state settings, overall plan generosity, and the potential for teachers to view DB and DC pensions as different products.
Citation: Dan Goldhaber, Kristian Holden (2020). How Much do Teachers Value Deferred Compensation? Evidence from Defined Contribution Rate Choices. CALDER Working Paper No. 242-0920
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 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 teaching vacancies and a larger share of novice teachers in classrooms. To better understand the long run effects of these changes and alternatives policies, the authors estimate a structural model of teacher retirement. Simulations of retirement behavior for a representative senior teacher 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 three years. Simulations of voluntary DC conversation plans suggest that many senior teachers would enroll, thereby reducing workforce turnover, and overall pension costs.
Citation: Shawn Ni, Michael Podgursky, Xiqian Wang (2020). Teacher Pension Enhancements and Staffing in an Urban School District. CALDER Working Paper No. 240-0620
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 issue given that public pension systems face increasing scrutiny due to ongoing concerns about their fiscal sustainability. This paper develops an empirical method to quantify the prevalence of salary spiking by identifying cases where end-of-career compensation deviates from expected levels of compensation. We apply this method to the teacher pension systems in Illinois and examine how salary spiking changed in response to policy reform. The results suggest that salary spiking is very common, with about half of late career employees observed as having pensionable compensation that exceeds expectations. Policies designed to dissuade salary spiking by internalizing its costs across districts appear to reduce the prevalence of salary spiking, but there may be unintended consequences for individuals who are not actually spiking, as such discouraging the assignment of supplementary responsibilities to late career employees.
Citation: Dan Goldhaber, Cyrus Grout, Kristian Holden (2020). A Method for Identifying Salary Spiking: An Assessment of Pensionable Compensation and Reform in Illinois. CALDER Working Paper No. 238-0620
There is growing interest in using measures of teacher applicant quality to improve hiring decisions, but the statistical properties of such measures are poorly understood. We present evidence on structured ratings solicited from teacher applicants’ references. We find that the reference ratings capture only one underlying dimension of applicant quality, which may indicate a need to broaden the range of questions posed to professional references. Point estimates of inter-rater reliability range between 0.23 and 0.31 and are significantly lower for novice applicants. It is difficult to judge whether these levels of reliability are high or low in the current context given so little evidence on comparable applicant assessment tools.
Citation: Dan Goldhaber, Cyrus Grout, Malcolm Wolff, Patricia Martinkova (2020). Evidence on the Dimensionality and Reliability of Professional References’ Ratings of Teacher Applicants. CALDER Working Paper No. 237-0620
Teacher turnover has adverse consequences for student achievement and imposes large financial costs for schools. Some have argued that high-stakes testing may lower teachers’ satisfaction with their jobs and could be a major contributor to teacher attrition. In this paper, we exploit changes in the tested grades and subjects in Georgia to study the effects of eliminating high-stakes testing on teacher turnover and the distribution of teachers across grades and schools. To measure the effect of testing pressures on teacher mobility choices we use a "difference-in-differences" approach,comparing changes in mobility over time in grades/subjects that discontinue testing vis-à-vis grades/subjects that are always tested. Our results show that eliminating testing did not have an impact on the likelihood of leaving teaching, changing schools within a district, or moving between districts. We only uncover small negative effects on the likelihood of grade switching. However,we do find relevant positive effects on retention of beginning teachers in the profession. In particular, the average probability of exit for teachers with 0-4 years of experience fell from 14 to13 percentage points for teachers in grades 1 and 2 and from 14 to 11 percentage points in grades 6 and 7.
Citation: Dillon Fuchsman, Tim Sass, Gema Zamarro (2020). Testing, Teacher Turnover and the Distribution of Teachers Across Grades and Schools. CALDER Working Paper No. 229-0220
Traditionally, teacher salaries have been determined solely by experience and educational attainment. This has led to chronic shortages of teachers in particular subject areas, such as math, science and special education. We study the first long-running statewide program to differentiate teacher pay based on subject area, Georgia’s bonus system for math and science teachers. Using a difference-in-differences strategy, we find the bonuses reduce teacher attrition by 18 to 28 percent. However, we find no evidence the program increases the probability that education majors become secondary math or science teachers upon graduation or alters specific major choices within the education field.
Citation: Carycruz Bueno, Tim Sass (2019). The Effects of Differential Pay on Teacher Recruitment and Retention . CALDER Working Paper No. 219-0519
In many school districts the policies that regulate personnel are governed by collective bargaining agreements (CBAs) negotiated between teachers’ unions and school boards. While there is significant policy attention and, in some cases, legislative action that has affected the scope of these agreements, there is relatively little research that assesses how CBAs vary over time, or whether they change in response to states’ legislative reforms. In this paper we compare CBAs in three states at two points in time: before and after substantial reforms in Michigan and Washington impacting collective bargaining and in California where there were no major statutory changes affecting CBAs. We find that few district characteristics predict changes in CBA restrictiveness over time, other than institutional spillovers from local bargaining structures. However, we observe that reforms to the scope of bargaining in Michigan and Washington drastically reduced the restrictiveness of Michigan and Washington CBAs relative to California.
Citation: Katharine Strunk , Joshua Cowen, Dan Goldhaber , Bradley D. Marianno, Tara Kilbride, Roddy Theobald (2018). Collective Bargaining and State-Level Reforms: Assessing Changes to the Restrictiveness of Collective Bargaining Agreements across Three States. CALDER Working Paper No. 210-1218-1
High teacher turnover imposes numerous burdens on the schools and districts from which teachers depart. Some of these burdens are explicit and take the form of recruiting, hiring and training costs. Others are more hidden and take the form of changes to the composition and quality of the teaching staff. This study focuses on the latter. We ask how schools respond to spells of high teacher turnover, and assess organizational and human capital effects. Our analysis uses two decades of administrative data on math and ELA middle school teachers in North Carolina to determine school responses to turnover across different policy environments and macroeconomic climates. Based on models controlling for school contexts and trends, we find that turnover has marked, and lasting, negative consequences for the quality of the instructional staff and student achievement. Our results highlight the need for heightened policy attention to school specific issues of teacher retention.
WP 203-0918-1 was originally released in September 2018. An updated version was released in December 2019.
Analyses of public policy issues often rely on administrative data collected by state and local governments. The reliability of such analyses is contingent on the quality of the data and it is tempting for researchers to take the accuracy of administrative data for granted. In this paper we show how this can lead to spurious research findings. Specifically, we use two sets of administrative data on teacher compensation to study the issue of salary spiking (where end-of-career spikes in compensation are used to boost pension benefits) in Washington State. We illustrate how discrepancies in the reporting of pensionable compensation can lead one to strikingly different conclusions about the prevalence and financial implications of salary-spiking behavior. Our findings point to the importance of understanding how data collection processes and administrative uses of the data may (fail to) incentivize accuracy in reporting.
Citation: Dan Goldhaber, Cyrus Grout, Kristian Holden (2018). Public Pensions and Salary Spiking: A Cautionary Tale of Data Inaccuracy Leading to Erroneous Results. CALDER Working Paper No. 202-0918-1
As states attempt to staff public school classrooms with qualified teachers, primary attention has focused on educator preparation and early career retention. Far less research has examined the staffing consequences of turnover induced by teacher pension plans. This paper makes use of a unique longitudinal data file with performance measures for all public school teachers in Tennessee. Descriptive analysis finds that higher quality teachers are less likely to retire for a given age and experience. To better understand the effects of pension plan incentives on workforce quality, we estimate a structural retirement model that explicitly allows for different work-retirement preferences for high and low quality teachers. We find that high quality teachers have a lower disutility for teaching as compared to retirement. Given that it costs less to keep high as compared to low quality teachers on the job, we use the structural estimates to simulate the effect of retention bonuses targeted to the former. One year retention bonuses produce an additional year of high quality teaching at a cost of roughly $40,000.
Citation: Shawn Ni, Michael Podgursky, Xiqian Wang (2018). Teacher Pension Plan Incentives, Retirement Decisions, and Workforce Quality. CALDER Working Paper No. 200-0718-1
We examine how pension rule changes affected teacher retirement by estimating an option-value retirement model on a large cohort of late career Missouri public school teachers from 1994 to 2008. In so doing we offer potential solutions to several statistical challenges that arise in estimating structural models of retirement on large panel data sets. The first concerns modelling the formation of teacher expectations of future pension rules. The second is bias induced by baseline sample selection: in baseline cohorts we only observe teachers who are still working. This bias also evolves with pension rule changes. A third challenge arises from maximum-likelihood estimation using large panels of micro-data on individual teachers. The teacher-level data can be difficult to obtain and the likelihood of teacher-data is costly to compute in large panels. We address these challenges by incorporating policy expecta- tions and sample selection directly into estimation of the likelihood. We also show that the likelihood can be efficiently estimated by using teacher data grouped by age and experience cells, which permits: a) estimating structural models of teacher retirement with data that are more widely available, and b) dramatic reductions in computation cost. Counterfactual simulations of the estimated structural model suggest that Missouri’s pension enhancements led to earlier retirement by about 0.4 years on average for the 1994 cohort and by more than one year in a steady state. Enhancements increased steady state pension liabilities by 16 percent for senior teachers.
This paper examines the influence of teacher assistants and other personnel on student outcomes in elementary schools during a period of recession-induced cutbacks in teachers and teacher assistants. Using panel data from North Carolina, we exploit the state’s unique system of financing its local public schools to identify the causal effects of teacher assistants and other staff on student test scores in math and reading and other outcomes. We find strong and consistent evidence of positive contributions of teacher assistants, an understudied staffing category, with larger effects on outcomes for minority students than for white students.
Citation: Steven Hemelt, Helen Ladd (2017). Teaching Assistants and Nonteaching Staff: Do They Improve Student Outcomes? (Update). CALDER Working Paper No. 169
State-specific licensing policies and pension plans create mobility costs for educators who cross state lines. We empirically test whether these costs affect production in schools – a hypothesis that follows directly from economic theory on labor frictions – using geocoded data on school locations and state boundaries. We find that achievement is lower in mathematics, and to a lesser extent in reading, at schools that are more exposed to state boundaries. A detailed investigation of the selection of schools into boundary regions yields no indication of systematic differences between boundary and non-boundary schools along other measured dimensions. Moreover, we show that cross-district labor frictions do not explain state boundary effects. Our findings are consistent with the hypothesis that mobility frictions in educator labor markets near state boundaries lower student achievement.
Citation: Dongwoo Kim, Cory Koedel, Shawn Ni, Michael Podgursky (2017). Labor Market Frictions and Production Efficiency in Public Schools. CALDER Working Paper No. 166
Public school teachers retire much earlier than comparable professionals. Pension rule changes affecting new teachers can be used to close this gap in the long run, but any effects will not be observed for decades and the implications for workforce quality are unclear. This paper considers targeted incentive policies designed to retain experienced high-need teachers, of retirement age, as instruments to extend current teachers’ careers. We use structural estimates from a dynamic retirement model to simulate the workforce effects of targeted late-career salary bonuses and deferred retirement (DROP) plans using administrative data from Missouri. The simulations suggest that such programs can be cost-effective, partly because long-term pension savings offset a portion of upfront program costs. More generally, we demonstrate the utility of using structural retirement models to analyze fiscal and workforce effects of changes to public sector pension plans, since the effects of pension reforms cumulate over many years.
Citation: Dongwoo Kim, Cory Koedel, Shawn Ni, Michael Podgursky, Weiwei Wu (2017). Pensions and Late Career Teacher Retention (Update). CALDER Working Paper No. 164
We rely on natural experiments in North Carolina and Washington State, which previously extended time to tenure by one year, to estimate models that assess the relationship between the extended probationary period and absence and attrition outcomes for teachers affected by the new tenure laws. Across both states we find evidence of decreases in teacher absences for probationary teachers who are subject to the new extended tenure laws, and in Washington, we find a significant reduction in absences in the specific year in which tenure was extended. We find mixed evidence for teacher attrition and mobility.
Citation: Dan Goldhaber, Michael Hansen, Joe Walch (2016). Time to Tenure: Does Tenure Reform Affect Teacher Absence Behavior and Mobility? . CALDER Working Paper No. 172
It is widely believed that teacher turnover adversely affects the quality of instruction in urban schools serving predominantly disadvantaged children, and a growing body of research investigates various components of turnover effects. The evidence at first seems contradictory, as the quality of instruction appears to decline following turnover despite the fact that most work shows higher attrition for less effective teachers. This raises concerns that confounding factors bias estimates of transition differences in teacher effectiveness, the adverse effects of turnover or both. After taking more extensive steps to account for nonrandom sorting of students into classrooms and endogenous teacher exits and grade-switching, we replicate existing findings of adverse selection out of schools and negative effects of turnover in lower-achievement schools. But we find that these turnover effects can be fully accounted for by the resulting loss in experience and productivity loss following the reallocation of some incumbent teachers to different grades.
Citation: Eric Hanushek, Steven Rivkin, Jeffrey Schiman (2016). Dynamic Effects of Teacher Turnover on the Quality of Instruction. CALDER Working Paper No. 170
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 state plans, over 10 percent of current teachers’ earnings are being set aside to pay for previously-accrued pension liabilities. This amounts to a large reduction in real operating spending per student. Our findings make clear that a significant fraction of the resources allocated toward teacher compensation in current public education budgets is not being invested in resources to educate today’s students at all.
August 2016 Update; Originally posted November 2015
Citation: Benjamin Backes, Dan Goldhaber, Cyrus Grout, Cory Koedel, Shawn Ni, Michael Podgursky, P. Brett Xiang, Zeyu Xu (2016). Benefit or Burden? On the Intergenerational Inequity of Teacher Pension Plans. CALDER Working Paper No. 148
Educators raise concerns about what happens to students when they are exposed to new teachers or teachers who are new to a school. These teachers face the challenge of preparing a year’s worth of new material, perhaps in an unfamiliar work environment. However, even when teachers remain in the same school they can switch assignments—teaching either a different grade or a different subject than they have taught before. While there exists some quasi-experimental literature on the effects for student achievement of being new to the profession (e.g., Rockoff, 2004) or to a school (Hanushek & Rivkin, 2010), to date there is little evidence about how much within-school churn typically happens and how it affects students. We use longitudinal panel data from New York City from 1974 to 2010 to document the phenomenon, and we tie assignment-switching behaviors to available student achievement in the period since 1999.
Citation: Allison Atteberry, Susanna Loeb, James Wyckoff (2016). High Rates of Within-School Teacher Reassignments and Implications for Student Achievement. CALDER Working Paper No. 151
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 administrative panel data. A Stock-Wise option value model provides a good fit to the data and predicts well out-of-sample on the effects of pension enhancements during the 1990s. The structural model is used to simulate the effect of alternatives to the current defined benefit plan.
Citation: Shawn Ni, Michael Podgursky (2015). How Teachers Respond to Pension System Incentives: New Estimates and Policy Applications. CALDER Working Paper No. 147
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 remain in covered employment. To identify the effect of the enhancement on teacher retention, we leverage the fact that the strength of the incentive increase varied across the workforce depending on how far teachers were from retirement eligibility when it was enacted. Our results indicate that the St. Louis enhancement – which was structurally similar to enhancements that were enacted in other public pension plans across the United States in the late 1990s and early 2000s – was not a cost-effective way to increase employee retention.
Citation: Cory Koedel, P. Brett Xiang (2015). Pension Enhancements and the Retention of Public Employees: Evidence from Teaching. CALDER Working Paper No. 123