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Could Different Retirement Benefits Result in More Effective Teachers?

Could Different Retirement Benefits Result in More Effective Teachers? We evaluate the chance that changing retirement benefits will lead to greater teacher effectiveness. Changing from defined benefit pensions to defined contribution or cash balance plans would raise initial compensation and effectiveness, while it would increase turnover and thus lower effectiveness. We simulate the effects of higher initial compensation and greater turnover on teacher effectiveness from changing retirement plans and calculate the potential transition costs. There is a 60–70 percent chance that effectiveness would fall if retirement benefits are changed. Transition costs could amount to 0.8 percent of payroll in the third decade after changing retirement benefits. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Eastern Economic Journal Springer Journals

Could Different Retirement Benefits Result in More Effective Teachers?

Eastern Economic Journal , Volume 39 (4) – Jan 28, 2013

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References (48)

Publisher
Springer Journals
Copyright
Copyright © 2013 by Eastern Economic Association
Subject
Economics; Economics, general; Economic Theory/Quantitative Economics/Mathematical Methods
ISSN
0094-5056
eISSN
1939-4632
DOI
10.1057/eej.2012.21
Publisher site
See Article on Publisher Site

Abstract

We evaluate the chance that changing retirement benefits will lead to greater teacher effectiveness. Changing from defined benefit pensions to defined contribution or cash balance plans would raise initial compensation and effectiveness, while it would increase turnover and thus lower effectiveness. We simulate the effects of higher initial compensation and greater turnover on teacher effectiveness from changing retirement plans and calculate the potential transition costs. There is a 60–70 percent chance that effectiveness would fall if retirement benefits are changed. Transition costs could amount to 0.8 percent of payroll in the third decade after changing retirement benefits.

Journal

Eastern Economic JournalSpringer Journals

Published: Jan 28, 2013

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