Estimates of Year-to-Year Volatility in Earnings and in Household Incomes from Administrative, Survey, and Matched Data

Dahl, Molly; DeLeire, Thomas; Schwabish, Jonathan

doi:10.1353/jhr.2011.0000

“…While most of these studies find, like us for transitory variances, increases in volatility in the 1970s and early 1980s (Dynarski and Gruber, 2007;Cameron and Tracy, 1998;Dynan et al, 2008;Shin and Solon, 2010), the two studies which had data through the late 1990s and early 2000s showed an additional significant increase in that period (Dynan et al, 2008;Shin and Solon, 2010), which we do not find despite using the same data; and one study found no increase at all in earlier periods, in contrast to our findings (U.S. Office, 2007;Dahl et al, 2010). 16 These differences must be traced either to differences in the measures-transitory variances versus volatility-or to differences in data.…”

Section: Differences Across Studiescontrasting

confidence: 99%

“…However, our results and theirs for the years 1985 and after differ very little, for both Dahl et al (2010) and we find no long-term trend in volatility or transitory variance after that year.…”

contrasting

confidence: 80%

Trends in the Transitory Variance of Male Earnings in the U.S., 1970-2004

Moffitt

¹

,

Gottschalk

²

2011

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes.You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. licence. www.econstor.eu The authors would like to thank the participants at many seminars and conferences for comments, Joe Tracy and John Abowd for discussant comments, and Tom DeLeire and Gary Solon for helpful conversations. We would also like to thank the Editor and two anonymous referees for comments. Outstanding research assistance was provided by Yonatan Ben-Shalom, Kai Liu, Shannon Phillips, and Sisi Zhang. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated AbstractTrends in the Transitory Variance of Male Earnings in the U. S., 1970-2004 We estimate the trend in the transitory variance of male earnings in the U.S. using the Michigan Panel Study of Income Dynamics from 1970 to 2004. Using both an error components model as well as simpler but only approximate methods, we find that the transitory variance started to increase in the early 1970s, continued to increase through the mid-1980s, and then remained at this new higher level through the 1990s and beyond. Thus the increase mostly occurred about thirty years ago. Its increase accounts for between 31 and 49 percent of the total rise in cross-sectional variance, depending on the time period. 1A substantial literature has accumulated on trends in various measures of instability in individual earnings and family income in the US over the last thirty or so years, with many studies finding increases in instability (Gottschalk and Moffitt, 1994;Moffitt and Gottschalk, 1995;Dynarski and Gruber, 1997;Cameron and Tracy, 1998;Haider, 2001;Hyslop, 2001;Stevens, 2001;Moffitt and Gottschalk, 2002;Dynan et al., 2008;Keys, 2008;Jensen and Shore, 2010;Shin and Solon, 2010). Increases have also been found in Canada (Baker and Solon, 2003;Beach et al., 2003Beach et al., , 2010Ostrovsky, 2010) and the UK (Dickens, 2000). Interest in trends in instability, particularly instability that comes from an increase in the transitory variance of earnings, has arisen for many reasons. One reason is that Friedman (1957) argued in his classic treatise that transitory fluctuations should hav...

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“…But this volatility does appear to differ markedly according to the data source (e.g. Dahl et al (2011)), suggesting that measurement error in survey data is a particular issue. This paper will contribute in a number of ways.…”

Section: Literaturementioning

confidence: 99%

Comparing sample survey measures of English earnings of graduates with administrative data during the Great Recession

Britton

¹

,

Shephard

²

,

Vignoles

³

2015

Working Paper Series

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper compares survey based labour earnings data for English graduates, taken from the UK's Labour Force Survey (LFS), with the UK Government administrative sources of official individual level earnings data. This type of administrative data has few sample selection issues, is substantially longitudinal and its large samples mean the earnings of subpopulations can be potentially studied (e.g. those who study a specific subject at a specific university and graduate in a specific year). We find that very broadly the LFS and administrative data show a similar distribution of graduates' earnings. However, the administrative data has considerably less gender disparity, higher high quantiles and more time series persistence. We also report on how the distribution of graduate and non-graduate earnings fell during each year of the great recession. Terms of use: Documents in

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“…There is a rich literature documenting earnings and household income volatility in the United States, with mixed evidence as to whether volatility has increased or decreased in recent decades (Dahl, DeLeire, and Schwabish 2011;Ziliak, Hardy, and Bollinger 2011;Dynan, Elmendorf, and Sichel 2012;Hardy and Ziliak 2014). Income volatility is higher for low-income households because of larger earnings fluctuations (Hardy and Ziliak 2014;Morduch and Schneider 2014).…”

Section: B Expected Effects Of Ssi Removalmentioning

confidence: 99%

Does Welfare Inhibit Success? The Long-Term Effects of Removing Low-Income Youth from the Disability Rolls

Deshpande

¹

2016

American Economic Review

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I estimate the effects of removing low-income youth with disabilities from Supplemental Security Income (SSI) on their earnings and income in adulthood. Using a regression discontinuity design based on a 1996 policy change in age 18 medical reviews, I find that youth who are removed from SSI at age 18 recover one-third of the lost SSI cash income in earnings. SSI youth who are removed and stay off SSI earn on average $4,400 annually, and they lose $76,000 in present discounted observed income over the 16 years following removal relative to those who do not receive a review. (JEL I30, I38, J14)

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Estimates of Year-to-Year Volatility in Earnings and in Household Incomes from Administrative, Survey, and Matched Data

Cited by 122 publications

References 29 publications

Trends in the Transitory Variance of Male Earnings in the U.S., 1970-2004

Trends in the Transitory Variance of Male Earnings in the U.S., 1970-2004

Comparing sample survey measures of English earnings of graduates with administrative data during the Great Recession

Does Welfare Inhibit Success? The Long-Term Effects of Removing Low-Income Youth from the Disability Rolls

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