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.
The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- The rising cost and unfunded liabilities of public pension systems and retiree health plans have become a matter of increasing public...
“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.