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Pension Funding in the Public Sector

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  • Olivia S. Mitchell
  • Robert S. Smith

Abstract

This paper explores the determinants of pension funding in the public sector. We formulate and test several hypotheses about the determinants of public employer pension funding practices, using a new data set describing financial and other characteristics of state, local, and teacher plans. The data show that, on average, public sector pension plans were relatively well-funded during the late 1980s. There were, however, wide variations in funding practices in our sample. Our analysis of these variations suggests that past funding practice tends to be perpetuated, that unionized employers are less likely to fully fund future pension obligations, and that funding is sensitive to fiscal pressure.

Suggested Citation

  • Olivia S. Mitchell & Robert S. Smith, 1991. "Pension Funding in the Public Sector," NBER Working Papers 3898, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3898
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    References listed on IDEAS

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    1. Montgomery, Edward & Shaw, Kathryn & Benedict, Mary Ellen, 1992. "Pensions and Wages: An Hedonic Price Theory Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(1), pages 111-128, February.
    2. Simon, Julian L, 1990. "Great and Almost-Great Magnitudes in Economics," Journal of Economic Perspectives, American Economic Association, vol. 4(1), pages 149-156, Winter.
    3. Kotlikoff, Laurence J. & Smith, Daniel E., 1984. "Pensions in the American Economy," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226451466.
    4. Robert P. Inman & David J. Albright, 1987. "Central Policies for Local Debt: The Case of Teacher Pensions," NBER Working Papers 2166, National Bureau of Economic Research, Inc.
    5. Ehrenberg, Ronald G. & Schwarz, Joshua L., 1987. "Public-sector labor markets," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 22, pages 1219-1260 Elsevier.
    6. Robert P. Inman, 1985. "The Funding Status of Teacher Pensions: An Econometric Approach," NBER Working Papers 1727, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Robert Novy-Marx & Joshua D. Rauh, 2008. "The Intergenerational Transfer of Public Pension Promises," NBER Working Papers 14343, National Bureau of Economic Research, Inc.
    2. Mohan, Nancy & Zhang, Ting, 2014. "An analysis of risk-taking behavior for public defined benefit pension plans," Journal of Banking & Finance, Elsevier, vol. 40(C), pages 403-419.
    3. Splinter, David, 2017. "State pension contributions and fiscal stress," Journal of Pension Economics and Finance, Cambridge University Press, vol. 16(01), pages 65-80, January.
    4. Olivia S. Mitchell & Roderick Carr, "undated". "State and Local Pension Plans," Pension Research Council Working Papers 95-13, Wharton School Pension Research Council, University of Pennsylvania.
    5. Olivia S. Mitchell & David McCarthy & Stanley C. Wisniewski & Paul Zorn, "undated". "Developments in State and Local Pension Plans," Pension Research Council Working Papers 99-4, Wharton School Pension Research Council, University of Pennsylvania.
    6. Dashle Kelley, 2014. "The political economy of unfunded public pension liabilities," Public Choice, Springer, vol. 158(1), pages 21-38, January.
    7. Mitchell, Olivia S., 1993. "Publicpension governance and performance : lessons for developing countries," Policy Research Working Paper Series 1199, The World Bank.
    8. repec:bla:pbudge:v:37:y:2017:i:1:p:68-87 is not listed on IDEAS
    9. Marguerite Schneider, 2000. "When Financial Intermediaries are Corporate Owners: An Agency Model of Institutional Ownership," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 4(3), pages 207-237, September.
    10. An, Heng & Huang, Zhaodan & Zhang, Ting, 2013. "What determines corporate pension fund risk-taking strategy?," Journal of Banking & Finance, Elsevier, vol. 37(2), pages 597-613.
    11. repec:spr:ecogov:v:19:y:2018:i:1:d:10.1007_s10101-018-0201-8 is not listed on IDEAS
    12. Tim V. Eaton & John R. Nofsinger & Abhishek Varma, 2014. "Institutional Investor Ownership and Corporate Pension Transparency," Financial Management, Financial Management Association International, vol. 43(3), pages 603-630, September.

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