Michael Bates

Why do employers offer pensions? We empirically explore two theoretical rationales, namely that pensions may improve worker effort and worker selection. We examine these hypotheses using administrative measures on effort and output in public schools around the pension-eligibility notch. Worker effort and output do not fall as workers cross the eligibility threshold, implying that pensions may not elicit additional effort. As for selection, we find that pensions retain low-value-added and high-value-added workers at the same rate, suggesting pensions have little or no influence on selection.

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We study whether reallocating existing teachers across schools within a district can increase student achievement, and what policies would help achieve these gains.  Using a model of multi-dimensional value-added, we find meaningful achievement gains from reallocating teachers within a district. Using an estimated equilibrium model of the teacher labor market, we find that achieving most of these gains requires directly affecting teachers' preferences over schools. In contrast, directly affecting principals' selection of teachers can lower student achievement. Our analysis highlights the importance of equilibrium and second-best reasoning in analyzing teacher labor market policies.

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