Managing Public Retirement Systems : Unions, Pension Reforms, and Public Sector Attractiveness
Hoang, Trang T
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In three empirical chapters, this dissertation investigates the determinants and consequences of pension benefit generosity and pension reforms. Applying the cutback management framework, Chapter 2 examines the impact of unions on negotiating generous pension benefits. The study finds that union collective bargaining rights do not influence how pension benefits and pension contributions are established but unions’ soft negotiating power such as political campaign donations and unionization intensity have a significant impact on raising pension benefits. Chapter 3 offers a comprehensive analysis of the internal and external driving factors of pension reforms. I find that in addition to the plan funded status, state fiscal health, and political ideology that play an important role in pension reform decisions, regional and national reform diffusion effects among neighboring and ideologically similar states increase the likelihood of pension reform enactment. Chapter 4 provides an empirical analysis of the effects of pension reforms on the public sector attractiveness. The study finds that the responsiveness of public sector employees to pension reforms differed by reform type and worker education. Explicit benefitreducing reforms are found to increase public sector turnover more than implicit reforms; additionally, pension reforms have stronger effects on turnover in states with a higher share of college-educated workers. As a whole, the dissertation implies that political factors, economic and fiscal conditions, union power, reform diffusion effects, and public employee responses to pension benefit cutback need to be considered together to understand how a state can continue to reform public sector retirement benefits. The findings of this study are important because pension benefits and pension reforms will continue to affect the long-term fiscal sustainability of plan sponsors and the quality of the public sector workforce.