This point should have been raised in an NYT article that discussed efforts by state and local governments to reduce their pension obligations. At present, state and local employees get somewhat lower compensation (including pension and health care benefits) than workers in the private sector with comparable education and experience. If pensions are cut back then the penalty for public sector workers will get larger. In the short-run most public employees will probably remain at their jobs even with pay cuts, however in the longer term economic theory predicts that governments that pay below market rates will have difficulty getting and keeping good workers.
Please login to comment
  • No comments found

Site Maintenance

"The CEPR website currently takes longer to load than usual. We hope to have this and other issues addressed shortly. While this much needed site maintenance is taking place, our content is still available so please continue to slooowwwly surf the pages of our site. Thank you for your patience."