Do Unfunded Obligations of Public-Sector Pension Plans get Capitalized into House Prices?

Abstract

This paper examines the degree to which unfunded obligations of public-sector pension plans are capitalized into house prices. While there has been a growing focus on the size of unfunded pension obligations of state and local governments, their impact on local housing markets has been far less analyzed. Given the large number of local pension plans from the state of Pennsylvania, we turn to the state. Using data on house prices from the Decennial Census of 1990 and 2000 and the 2007-2011 American Community Survey, we find no evidence that unfunded pension obligations are capitalized into house prices.