The Economics of State and Local Public Pensions
This paper provides an overview of an economics-based perspective on the financial aspects of state and local public pensions in the U.S. Drawing on the research commissioned for an NBER research program on this topic, we discuss the large degree to which public pension liabilities exceed the assets set aside to fund them. We summarize issues related to the optimality of pre-funding, portfolio allocation, the discounting of liabilities, as well as how plans operate in practice. We also lay out an agenda for future research related to financial aspects of public pensions, retiree health plans for public employees, as well as issues related to plan design and labor market outcomes.
|Date of creation:||Feb 2011|
|Date of revision:|
|Publication status:||published as “The Economics of State and Local Pensions.” Journal of Pension Economics and Finance. Vol . 10(2): pages 161 - 172. April 2011. With Robert Clark and Joshua Rauh.|
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- Alicia H. Munnell & Jean-Pierre Aubry & Laura Quinby, 2010.
"Public Pension Funding in Practice,"
NBER Working Papers
16442, National Bureau of Economic Research, Inc.
- Friedberg, Leora, 2011. "Labor market aspects of state and local retirement plans: a review of evidence and a blueprint for future research," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(02), pages 337-361, April.
- Deborah Lucas, 2007. "Valuing & Hedging: Defined Benefit Pension Obligations - The Role of Stocks Revisited," Money Macro and Finance (MMF) Research Group Conference 2006 169, Money Macro and Finance Research Group.
- Jeffrey R. Brown & David W. Wilcox, 2009. "Discounting State and Local Pension Liabilities," American Economic Review, American Economic Association, vol. 99(2), pages 538-42, May.
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