The Economics of State and Local Public Pensions
Jeffrey R. Brown
University of Illinois at Urbana-Champaign - Department of Finance; National Bureau of Economic Research (NBER); University of Illinois College of Law; University of Illinois at Urbana-Champaign - Institute of Government and Public Affairs (IGPA); University of Illinois at Urbana-Champaign - Department of Economics
Robert L. Clark
North Carolina State University - Poole College of Management
Joshua D. Rauh
Stanford Graduate School of Business; National Bureau of Economic Research (NBER)
NBER Working Paper No. w16792
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.
Number of Pages in PDF File: 24
Date posted: February 28, 2011
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