St.Clair T, Guzman JPM.

Contribution Volatility and Public Pension Reform

. Journal of Pension Economics and Finance. 2017;Forthcoming.Abstract
In the wake of the economic downturn of 2008-2009, researchers and policymakers have focused considerable attention on the extent of unfunded liabilities in U.S. public sector pension plans and the implications for the long term fiscal sustainability of state and local governments. In response to the growth in liabilities, many states have introduced legislation that cuts back on defined benefit plan commitments, in some cases even shifting the pension system from a defined benefit to a defined contribution or hybrid plan. This paper explores the factors that have led states to engage in pension reform, focusing particular attention on one factor that has only recently gained attention in the research literature: contribution volatility. While unfunded liabilities have significant long-term solvency implications, in the short-term fluctuations in the amount of required contributions pose substantial difficulties for the ability of plan sponsors to balance budgets and engage in strategic planning. We begin by quantifying the volatility in the required contributions US states were expected to make between 2001-2013 and comparing the volatility of pension spending to other relevant tax and spending measures. Next, we describe the various types of pension reforms that states have implemented and examine the fiscal pressures facing those states that have engaged in reform. States with greater fluctuations in their required payments have been more likely to reduce benefits and increase employee contributions; they have also been more likely to institute these reforms sooner.
St.Clair T.

How Do Nonprofits Respond to Regulatory Thresholds: Evidence from New York's Audit Requirements

. Journal of Policy Analysis and Management. 2016;35(4):772-790.Abstract
Nonprofits in the United States must comply with various state and federal regulations to maintain their tax-exempt status. Despite persistent calls to increase accountability in the nonprofit sector, there is little research examining the burden imposed by existing regulatory requirements, especially at the state level. This paper uses a bunching design to estimate the avoidance behavior exhibited by tax-exempt charities in response to New York state's audit requirements. There is clear evidence of bunching in response to the requirement that nonprofits above certain revenue thresholds file financial statements reviewed by or audited by an independent CPA. Measuring the extent of bunching around the revenue notches yields estimates of the average revenue that nonprofits either forego or fail to report in avoidance of the requirements. Results from dynamic estimation show that charities near the threshold for a review engagement report approximately $1,300 less revenues than otherwise predicted by a counterfactual; charities near the threshold for a full audit report approximately $1,400 less. The results have implications for the optimal design of state-level financial regulations.
St.Clair T, Hallberg K, Cook TD.

The Validity and Precision of the Comparative Interrupted Time-Series Design: Three Within-Study Comparisons

. Journal of Educational and Behavioral Statistics. 2016;41(3):269-299.Abstract
We explore the conditions under which short, comparative interrupted time series (CITS) designs represent valid alternatives to randomized experiments in educational evaluations. To do so, we conduct three within-study comparisons, each of which uses a unique data set to test the validity of the CITS design by comparing its causal estimates to those from a randomized controlled trial (RCT) that shares the same treatment group. The degree of correspondence between RCT and CITS estimates depends on the observed pretest time trend differences and how they are modeled. Where the trend differences are clear and can be easily modeled, no bias results; where the trend differences are more volatile and cannot be easily modeled, the degree of correspondence is more mixed, and the best results come from matching comparison units on both pretest and demographic covariates.
St.Clair T, Cook TD.

Difference-in-Differences Methods in Public Finance

. National Tax Journal. 2015;68(2):319-338.Abstract
Recognizing that cross-sectional data are often insufficient to address the identification problems associated with estimating the effect of government taxation or spending, economists engaged in public finance research often utilize longitudinal data that span the period over which a policy change occurred. As economic data have proliferated over the last decade, uses of the difference-in-differences design and its variations have become more numerous. Nevertheless, published research that invokes difference-in-differences commonly fails to present evidence and reasoning that enable the reader to properly evaluate the causal claims under investigation. In this paper, we examine the threats to internal validity that exist when using difference-in-differences for causal inference and review variations of the design that can be used to address these threats. Next, we survey the public finance literature in order to examine the ways that these threats are addressed in practice. We conclude by proposing a number of recommendations for researchers to consider as they implement difference-in-differences as an empirical strategy.
St.Clair T, Cook TD, Hallberg K.

Examining the Internal Validity and Statistical Precision of the Comparative Interrupted Time Series Design by Comparison with a Randomized Experiment

. American Journal of Evaluation [Internet]. 2014;35(3):311-327. WebsiteAbstract
Although evaluators often use an interrupted time series (ITS) design to test hypotheses about program effects, there are few empirical tests of the design’s validity. We take a randomized experiment on an educational topic and compare its effects to those from a comparative ITS (CITS) design that uses the same treatment group as the experiment but a nonequivalent comparison group that is assessed at six time points before treatment. We estimate program effects with and without matching of the comparison schools, and we also systematically vary the number of pretest time points in the analysis. CITS designs produce impact estimates that are extremely close to the experimental benchmarks and, as implemented here, do so equally well with and without matching. Adding time points provides an advantage so long as the pretest trend differences in the treatment and comparison groups are correctly modeled. Otherwise, more time points can increase bias.
St.Clair T.

The Impact of Budget Stabilization Funds on State Pension Contributions

. Public Budgeting and Finance [Internet]. 2013;33(3):55-74. WebsiteAbstract
Despite the shortfalls in public employee pension funds, there is little known about the effect of fiscal institutions on pension funding. This paper focuses attention on the link between pension contributions and budget stabilization funds (BSFs) over the period 1997–2008. It employs the Blundell–Bond (1998) estimator in order to address the concern that the deposit and withdrawal rules that drive the management of BSFs may be endogenous to state pension contributions. Empirical results suggest that BSFs with strict deposit rules are associated with higher pension contributions, while strict withdrawal rules are associated with lower contributions.
Avery C, St.Clair T, Levin M, Hill K.

The 'Own Children' Fertility Estimation Procedure: A Reappraisal

. Population Studies [Internet]. 2013;67(2):171-183. WebsiteAbstract
The Full Birth History has become the dominant source of estimates of fertility levels and trends for countries lacking complete birth registration. An alternative, the ‘Own Children’ method, derives fertility estimates from household age distributions, but is now rarely used, partly because of concerns about its accuracy. We compared the estimates from these two procedures by applying them to 56 recent Demographic and Health Surveys. On average, ‘Own Children’ estimates of recent total fertility rates are 3 per cent lower than birth-history estimates. Much of this difference stems from selection bias in the collection of birth histories: women with more children are more likely to be interviewed. We conclude that full birth histories overestimate total fertility, and that the ‘Own Children’ method gives estimates of total fertility that may better reflect overall national fertility. We recommend the routine application of the ‘Own Children’ method to census and household survey data to estimate fertility levels and trends.
Hill E, Wolman H, Kowalczyk K, St.Clair T.

Forces Affecting City Population Growth or Decline: The Effects of Inter-Regional and Inter-Municipal Competition

. In: Rebuilding America's Legacy Cities: New Directions for the Industrial Heartland. New York: American Assembly; 2012.
St.Clair T.

The Effect of Tax and Expenditure Limitations on Revenue Volatility: Evidence from Colorado

. Public Budgeting and Finance [Internet]. 2012;32(3):61-78. WebsiteAbstract
Much of the research on tax and expenditure limitations (TELs) focuses on the impact that limits have on the size of the public sector or the distribution of expenditures at the state and local levels. While these results shed light on the extent to which TELs succeed in reducing government spending, they do not have much to say about the impact of TELs on government budgeting or financial planning, despite the fact that voters support TELs in the hope of reducing gov- ernment inefficiency (Courant, Gramlich, and Rubinfeld 1980; Ladd and Wilson 1982). This paper examines the effect of TELs on the stability of government revenues; sound tax policy entails controlling the volatility of revenues in order to plan more effectively for the future. Using panel data from Colorado’s Divi- sion of Local Government as well as the Census Bureau’s Annual Survey of State and Local Government Finances, this paper examines the impact of Colorado’s 1992 Taxpayer’s Bill of Rights (TABOR) on local government finances. Results from difference-in-difference estimation suggest that TELs increase revenue and expenditure volatility.
Hill E, St.Clair T, Wial H, Wolman H, Atkins P, Blumenthal P, Ficenec S, Friedhoff A.

Economic Shocks and Regional Economic Resilience

. In: Urban and Regional Policy and Its Effects, Vol. 4. Washington, DC: Brookings Institution Press; 2012.
Atkins P, Blumenthal P, Curran L, Edisis A, Friedhoff A, Lowry L, St.Clair T, Wial H, Wolman H.

Responding to Manufacturing Job Loss: What Can Economic Development Policy Do?

. Metropolitan Policy Program at Brookings; 2011.