Abstract: Using data covering a wide range of municipal public-sector pension plans from 1962– 2014, I establish that unfunded pension benefits grow faster under Democratic-party mayors. The result is borne out in a generalized difference-in-differences (DiD) specification in levels and in growth rates as well as in a regression discontinuity design (RDD) focusing on narrow mayoral races. There is some evidence that the partisan effect is concentrated in police and fire-fighter plans. Being on a council-manager system matters very little to these patterns. While Tiebout sorting has been the proposed explanation for previous findings that parties do not matter for a range of fiscal outcomes in U.S. cities, Tiebout sorting may actually accentuate fiscal profligacy in the case of unfunded pensions.
Tuesday, March 5, 2019
Using data covering a wide range of municipal public-sector pension plans from 1962– 2014, I establish that unfunded pension benefits grow faster under Democratic-party mayors
Political Parties Do Matter in U.S. Cities ... For Their Unfunded Pensions. Christian Dippel. NBER Working Paper No. 25601, Feb 2019. https://www.nber.org/papers/w25601
Abstract: Using data covering a wide range of municipal public-sector pension plans from 1962– 2014, I establish that unfunded pension benefits grow faster under Democratic-party mayors. The result is borne out in a generalized difference-in-differences (DiD) specification in levels and in growth rates as well as in a regression discontinuity design (RDD) focusing on narrow mayoral races. There is some evidence that the partisan effect is concentrated in police and fire-fighter plans. Being on a council-manager system matters very little to these patterns. While Tiebout sorting has been the proposed explanation for previous findings that parties do not matter for a range of fiscal outcomes in U.S. cities, Tiebout sorting may actually accentuate fiscal profligacy in the case of unfunded pensions.
Abstract: Using data covering a wide range of municipal public-sector pension plans from 1962– 2014, I establish that unfunded pension benefits grow faster under Democratic-party mayors. The result is borne out in a generalized difference-in-differences (DiD) specification in levels and in growth rates as well as in a regression discontinuity design (RDD) focusing on narrow mayoral races. There is some evidence that the partisan effect is concentrated in police and fire-fighter plans. Being on a council-manager system matters very little to these patterns. While Tiebout sorting has been the proposed explanation for previous findings that parties do not matter for a range of fiscal outcomes in U.S. cities, Tiebout sorting may actually accentuate fiscal profligacy in the case of unfunded pensions.
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