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RSF Review

State Pensions After the Financial Crash

March 5, 2013

As part of our Great Recession initiative, Alicia Munnell and her colleagues at the Center for Retirement Research at Boston College have published a new report on state and local pension plans in the aftermath of the 2007 financial crash. Here is the abstract:

State and local governments have been facing an extraordinarily difficult fiscal environment in recent years. One of many challenges has been restoring public pension plans to a sound fiscal footing after the economic crisis of 2007-09. States have begun to respond by enacting a mix of revenue increases and benefit cuts. These changes will, over time, improve the financial outlook for plans and help ease their impact on other budget priorities. This study analyzes the nature and magnitude of these effects by analyzing pension costs before the financial crisis, after the financial crisis, and after reforms for a sample of 32 plans in 15 states. The results show that most of the sample plans responded with significant pension reforms, generally increasing employee contributions and lowering benefits for new employees; the changes were largest for plans with serious underfunding and those with generous benefits; in most cases, reforms fully offset or more than offset the impact of the financial crisis on the sponsors’ annual required contribution; and employer contributions to accruing benefits for new employees were cut in half, sharply lowering compensation for future workers. In short, states have made more changes than commonly thought. Whether these changes stick or not is an open question.

The Impact of Early Education: An Interview with Jane Waldfogel

Rohan Mascarenhas, Russell Sage Foundation
February 28, 2013

preschool researchJane Waldfogel is a professor of social work and public affairs at Columbia University School of Social Work. She has written extensively on early childhood education and the impact of public policies on child and family well-being. In this interview, she discusses President Obama's recent proposal to expand access to preschool.

Q: In response to President Obama's preschool plan, many opinion writers pointed skeptically to Head Start, the major federal early education program. It seems to be settled fact in Washington that Head Start, to quote TIME's Joe Klein, "simply does not work." Others argue that most of the other research on early education comes from targeted, intensive programs, such as the Perry Project, whose quality will probably not be replicated in scaled-up efforts. So let me ask you -- do you think that available research supports higher investments in early education programs? Is there evidence or unanswered questions that gives you pause about expanding preschool access?

A: While policymakers in Washington have been debating the merits of Head Start, and the generalizability of the early model programs such as Perry, state lawmakers have been quietly moving forward with universal pre-kindergarten (pre-K). These pre-K programs, which now serve more than 20% of 4-year olds, differ from Head Start, and the early model programs, in some very important ways. First, they are universal – they are open to all children in the community (although when resources are limited, states do try to serve disadvantaged children and communities first). And second, they are administered and supervised by the schools (even if not always located at schools – in some states, community-based providers can be approved as pre-K providers as long as they meet the pre-K requirements, which include highly qualified teaching staff and approved curricula). This quiet pre-K expansion has been going on for some time, and we now have quite a bit of evidence about its effects (see review in Ruhm & Waldfogel, 2012). That evidence is clear – children who have the opportunity to attend pre-K enter school with better reading and math skills, and these effects tend to be largest for the children who would otherwise be the furthest behind. These results come from studies in several states, using rigorous methods such as regression discontinuity analyses. Governors and state legislators are familiar with this research evidence, and they have been eager to expand pre-K programs. But it’s tough to do this with limited state funds. So that’s why the Obama initiative to make federal funds available is so welcome.

Life Expectancy Predictions

Rohan Mascarenhas, Russell Sage Foundation
February 27, 2013

life expectancy tasksProjecting how long you think you will live is a crucial exercise in retirement planning. An estimate of life expectancy could determine, for example, your savings rate, a portfolio allocation, or whether or not you should buy an annuity. The standard theoretical model predicts that individuals make unbiased estimates of their life expectancy based on personal, relevant information, such as family history, illness, lifestyle choices, and so on. But a new paper, funded by our consumer finance working group, suggests that life expectancy estimates can be, at least in part, also affected by irrelevant context factors -- in this case, the way survey questions are worded.

For their newly published article, John W. Payne, Namika Sagara, Suzanne Shu, Kirstin C. Appelt and Eric J. Johnson conducted experiments in which they asked half of the respondents to provide probabilities of their living to a certain age, and the other half to provide probabilities of their dying by a certain age. Ostensibly, these questions are asking the same thing, but the results yielded a surprising result: Those given the "live-to" question reported significantly higher chances of being alive at ages 55 through 95 than those who answered the "die-by" question. In fact, in the first two surveys, which included nearly 2,000 respondents, the mean life expectancy was 8.68 years higher in the live-to frame than the die-by frame.

An "Important Book" on the Gender Education Gap

February 26, 2013

Writing for The Atlantic, Philip Cohen, a sociologist and creator of the excellent blog Family Inequality, praises our latest book, The Rise of Women:

The Rise of Women: The Growing Gender Gap in Education and What it Means for American Schools is both ambitious and modest in its goals: Sociologists Thomas DiPrete and Claudia Buchmann provide an ambitious analysis of why and how girls are outperforming boys in high school and going on to get a disproportionate share of college degrees. However, the authors modestly remain within their subject matter and avoid the unsupported claims about women's looming social dominance that have inflated much of the conversation about gender dynamics today.

This allows us to have a reasonable, valuable conversation about an important problem: the failure of the education system to help a majority of students to reach their academic potential. We clearly do not have a problem of over-education among women. Even among Whites alone, women as well as men are graduating college at rates lower than those in the most educationally advanced societies (which used to include the United States). Rather, we have a dysfunctional system that underperforms for men more than for women.

Rather than focusing on the full range of educational failures, DiPrete and Buchmann focus on a low-hanging fruit policy question: How can we improve college degree attainment for the approximately one-third of students who are ready to graduate college but do not, because they do not have the resources, they change their minds for some reason, or they are not adequately supported in the endeavor?

Workplace Violation Rates in the Low-Wage Sector

February 22, 2013

After President Obama's call for a higher federal minimum wage, much of the public debate over the proposal, including on this blog, has focused on the impact of the minimum wage on the labor market and on business profits. But a new study funded by the Foundation suggests that the potential disemployment effects of a minimum wage hike -- if any -- should be only one part of a wider discussion of working conditions in the low-wage sector. Using a novel measurement technique, the study investigates how many employers in low-wage industries pay the existing minimum wage -- and its results are quite sobering.

In their article in the latest Social Forces, Annette Bernhardt, Michael Spiller and Diana Polson draw from a landmark representative survey of frontline workers in low-wage industries to reveal disturbingly high rates of workplace violations, including minimum wage, overtime and other employment laws. The study is especially notable because measuring labor law violations is notoriously difficult: low-wage workers are hard to reach (and to accurately sample), and employers are unlikely to admit to breaking labor laws. For their data, the authors rely on the 2008 Unregulated Work Survey, which used Respondent-Driven Sampling to reach more than 4,300 workers in low-wage industries in Chicago, Los Angeles and New York City. The authors summarize their conclusions:

We found high violation rates of a wide range of employment and labor laws, with fully 67.5 percent of our sample having experienced at least one form of wage theft in the previous work week. We also document high rates of employer retaliation when workers made a complaint or tried to organize a union, and a workers' compensation system that is essentially nonfunctional in this part of the labor market. These prevalence rates, combined with the substantial amount of stolen wages (15% of wages due, on average), suggests that workplace violations are becoming standard practice in the low-wage labor market.

The Rise of Women: Seven Charts Showing Women's Rapid Gains in Educational Achievement

February 21, 2013

Our latest book, The Rise of Women: The Gender Gap in Education and What It Means for American Schools provides a detailed and accessible account of women's rapid educational gains over the past 50 years. It also examines several enduring policy problems, such as stagnating male college graduation rates, and why women continue to lag behind men in engineering and physical science degrees. Below, we have compiled seven charts from The Rise of Women that show recent trends in the gender gap in education, along with a brief explanation of each figure (also taken from the book):

women in education

The figure above reports trends in GPA over time for male and female students. Several points are noteworthy. First, the figure shows an increase in overall GPA between 1972 and 2004 for males and females of about 0.4 to 0.5 on a 4.0 GPA scale. A statistically significant female-favorable grade gap exists for each time point, and the size of these gaps remains relatively constant, ranging from about 0.24 to 0.30 over the period.

women in education

Women born in the late 1950s and early 1960s (who were of college age during the 1980s) overtook men in their rates of completing bachelor's degrees. On a cohort-by-cohort basis, the male college graduation rate peaked around the birth cohort of 1950 and then remained essentially flat for about fifteen birth cohorts. By 2010 twenty-six- to twenty-eight-year-old females had a more than eight-percentage-point lead in college degree receipt over their male counterparts. This constitutes an enormous change in the relative position of men and women in a very short period of time.

women in education

The figure displays trends in men’s and women’s completion of master’s degrees from the 1969–1970 school year to the 2009–2010 school year. Just over three decades ago, in 1969–1970, more men than women completed master’s degrees: 143,083 master’s degrees were awarded to men, compared to 92,481 awarded to women (Snyder and Dillow 2012). But from 1980 onward, women’s rate of master’s degree completion grew more rapidly. By 2009–2010, women were awarded roughly 50 percent more master’s degrees than men—417,828 versus 275,197.

women in education

Women’s growth in professional and doctoral degrees has been slower than that for bachelor’s or master’s degrees, and they have only recently reached parity with men in professional and doctoral degrees. In 1970 men completed sixteen times more professional degrees than women did. But since 1982, the number of professional degrees completed by men has declined slightly (from 40,229 in 1982 to 34,661 in 2010), while women’s professional degree completion has increased almost twentyfold—from 1,534 professional degrees in 1970 to 30,289 in 2010.

women in education

In 1969-1970, women comprised almost 40 percent of all students awarded master's degrees, but they comprised only 11 percent of students awarded doctoral degrees and 6 percent of students awarded professional degrees. Women's share of master's degrees has grown over the past three decades, and women currently comprise 60 percent of students earning master's degrees.

women in education

The number of degrees earned by women differs enormously across these fields (and therefore the counts are reported on a log scale). Women have increased the number of advanced degrees they earn in all fields since the early 1970s. Since the 1980s, women have earned more than 50 percent of the advanced degrees in the social sciences and humanities as well as in other health professions and education; the same has been true in social sciences and humanities since the mid-1970s. In life sciences, women achieved parity and then surpassed men in advanced degrees in the early years of the current decade. They have nearly reached parity with men in the combined fields of medicine, dentistry, and law, and they have been heading steadily toward parity in advanced business degrees. Women’s share of total degrees in physical sciences and mathematics is lower than in these other fields, but their steady gains in physical sciences and mathematics show no sign of plateauing.

New U.S. 2010 Brief: Great Recession and Residential Mobility

February 20, 2013

Michael Stoll has released a new U.S. 2010 research brief entitled "Great Recession Spurs a Shift to Local Moves." Here is the executive summary:

Americans are very mobile. Over the last three decades the percent of Americans who moved in a given year was always more than 10%. But mobility has been declining in this period. More telling, in the last decade and especially in the years just before and during the Great Recession, there was a consistent decline in long-range migrations and a rise in local moves. This report shows several ways in which the Great Recession was implicated in these trends.

Because the recession was nation-wide, it shut off the lure of “better job pastures” elsewhere. It officially dates from 2008 to 2010 but its impacts began sooner and lasted longer. Its key characteristics were an exploding housing “bubble” that led to a collapsed housing industry that spiked unemployment, which in turn led to more foreclosures and put great pressure on financial institutions. The Great Recession hurt, to varying degrees, all regions of the country. People seeking better jobs (or even jobs) could not simply move West, South, East or North.

The Great Recession forced more people to move locally. People moved the most in metropolitan areas with the highest unemployment, the highest foreclosures – particularly the West and South, areas hard hit by the Great Recession. People who lost their jobs and/or their homes moved locally, to someplace cheaper. Unlike the past decades, when local movers were moving up economically – from an apartment to a house, from one house to a better one – these movers were moving down economically, seeking a cheaper home.

Black residents were particularly vulnerable. Not only did more black residents, proportionally, lose jobs, those losses were more likely to force black residents to move. Similarly, ore black homeowners, proportionally, entered foreclosure, and they were more likely to end up moving than foreclosed whites.

Is Early Childhood Education Effective?

February 19, 2013

In our last two posts on preschool education, we looked at the some of the lessons and results of recent expansions of preschool in France and Great Britain. Today, we turn our attention to research conducted on early education programs in America. In 2007, Brian A. Jacob and Changing Poverty, Changing Policies. Here is an excerpt from their review on early education:

Disparities in academic achievement by race and class are apparent as early as ages three and four, well before children enter kindergarten. Recent research in neuroscience, developmental psychology, economics, and other fields suggests that the earliest years of life may be a particularly promising time to intervene in the lives of low-income children (Shonkoff and Phillips 2000; Carniero and Heckman 2003; Knudsen et al. 2006). Studies show that early childhood educational programs can generate learning gains in the short run and, in some cases, improve the long-run life chances of poor children. Moreover, the benefits generated by these programs are large enough to justify their costs.

The Perry Preschool and Abecedarian programs are commonly cited as examples of high-quality preschool services that can change the lives of low-income children. A small group of children who participated in these programs in the 1960s and 1970s have been followed for many years and on average have better outcomes in a range of domains compared to a randomly assigned group of control children (Schweinhart et al. 2005; Ramey and Campbell 1979; Campbell et al. 2002; Barnett and Masse 2007). Despite the high cost of these programs, these studies suggest that their total economic benefit exceeded their costs (Belfield et al. 2006; Barnett and Masse 2007). Although these results are encouraging, it is important to keep in mind that these are model programs that were unusually intensive and involved small numbers of children in just two sites.

Nevertheless, the evidence on publicly funded early education programs, illustrating what can be achieved for large numbers of children in programs of variable quality, is also very encouraging. A recent random assignment evaluation of Head Start found positive short-term effects of program participation on a variety of cognitive skills on the order of 0.2 to 0.4 standard deviations, with typically positive effects on noncognitive outcomes as well (though they are usually not statistically significant). A rigorous evaluation of Early Head Start, a program serving children under age three in a mix of home- and center-based programs, found positive effects on some aspects of parent practices and children’s development, but the effects were generally smaller than for Head Start (Love et al. 2002).