For this post, I interviewed Professor Maria Fitzpatrick. She
is an Associate Professor in the Department of Policy Analysis and Management
at Cornell University. In addition, she is the Director of the Cornell
Institute for Public Affairs. Her research focuses on policies that affect
children and families, and in particular, policies related to education. She
studies them through the lens of economics.
I interviewed Professor Fitzpatrick about her paper, “Early Retirement Incentives and Student Achievement.” In this paper, Professor Fitzpatrick
and her coauthor, Michael Lovenheim, look at how these early retirement incentives
(ERI) programs for teachers affect students’ academic performance. The results
might surprise you.
Professor Fitzpatrick explained to me that schools, or any
employers, offer ERI’s as a cost-saving measure, since more experienced workers
are usually more expensive than less experienced workers. Instead of laying off workers, employers give
them bonuses to choose to stop working, and retire early. In some cases, employers
are suffering from the effects of a recession, and this is a convenient way to
reduce the workforce. But there are other cases where the technology of an industry
has changed over time, and newer, more recently trained workers are
better-suited for certain jobs.
In the case of teachers, their pension plans are often designed so that it makes the most financial sense for them to work until a particular cutoff date, and retire on that date. Because of the ERI programs, they can now afford to retire early.
The question these authors are asking is: how do
ERI programs affect student learning? Some previous work has found that teacher
effectiveness increases with experience. So we might expect that, when these
more experienced teachers are replaced with new teachers, student performance
would decrease.
To test this, these authors measure performance with scores
on standardized tests in math and English of third, sixth, and eighth graders. Using
data from Illinois in the 1990s, they compare scores before and after ERI
programs. They actually find that test scores increase as a result of the program.
So what’s happening here? This is a policy that gives teachers
a choice to retire early. While on average teacher quality seems to improve
with experience, it’s likely that the least productive teachers are the ones
who are taking advantage of the ERI programs: teachers who no longer enjoy
teaching and are just waiting to reach that cutoff date, or maybe someone who
has recently been sick and hasn’t been able to consistently come to school. We
probably all have examples from our own experience of teachers who would fall
into this category. Once these teachers take advantage of an ERI program, the
higher quality experienced teachers remain, and test scores increase. Hence, we
have an example of positive unintended
consequences!
The authors also poke around at how different students might
be affected differently. One important finding is that the largest increase in
test scores from teacher retirements happens in schools that are in low income
neighborhoods. This makes sense, because previous work has found that teachers
tend to move to wealthier districts over their careers, and moving is easier
for higher quality teachers.
Even though the unintended consequences of this policy were
positive, I did ask Professor Fitzpatrick if the results make her think that
there might be better ways to design this policy. She told me that this study
sheds light on the design of the pension plans: keeping teachers around until
that cutoff date, and/or giving them an incentive to retire early may not be
the best way to go when thinking about retaining the highest quality teachers. Instead,
policymakers should be thinking about creative ways to retain the best teachers.
I asked Professor Fitzpatrick about some of her other recent
work. In her paper, “Pension-spiking, Free-riding, and the Effects of PensionReform on Teachers' Earnings,” she finds some very interesting unintended
consequences of pension reform. Pension spiking happens when teachers work a
lot towards the end of their careers, because their pensions are based on their
work in these years. The government of Illinois tried to reduce pension payouts
by preventing teachers from working a lot in just their last couple of years. Teachers
responded by working more in the preceding years; so even though pension
spiking appeared smoother, the pension fund did not save any money.
Let’s talk! I would love to know what you think about this
example of unintended consequences. Please submit comments and questions.
