Long term trends in earnings inequality: what the CPS can tell us

Burkhauser, Richard V.; Butler, J. S.; Feng, Shuaizhang; Houtenville, Andrew J.

doi:10.1016/j.econlet.2003.08.011

Cited by 39 publications

(47 citation statements)

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“…Burkhauser et al (2004) point out that using the P90/P10 of adjusted family income may not eliminate the effects of changes in the top coding even, if the top code for family income is above the P90 in all years. They propose an alternative method which we apply to our sample of all persons living in families with a head between the ages of 22 and 62.…”

Section: Changes In Family Income Inequalitymentioning

confidence: 99%

“…We recognize that when individual components of income, for example earnings and nonearned income, are each top-coded, then the P90/P10 of total income may be affected. We, therefore, also use a procedure described in Burkhauser et al (2004) to deal with this potential problem.…”

Section: Measurement Issuesmentioning

confidence: 99%

“…These Census Bureau procedures differ from those used in official statistics in many European countries. 14 We also used the household as the income sharing unit, as suggested by Burkhauser et al (2004), and find that our results are not sensitive to the choice of income sharing unit.…”

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confidence: 99%

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Inequality of Wage Rates, Earnings and Family Income in the United States, 1975-2002

2005

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This paper analyzes distributional changes over the last quarter of the twentieth century. We focus on four distinct distributions: the distribution of hourly wage rates, the distribution of annual earnings of individuals, the distribution of annual earnings of families, and the distribution of total family income adjusted for family size. Both male wage rate inequality and family income inequality accelerated during the early 1980s, increased at a slower rate through the early 1990s and then stabilized at a high level through the early 2000s. The similarity in the timing of changes in these two distributions has been used as evidence that increased family income inequality primarily reflects increased inequality of wage rates. We show that other important factors were also at work.

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Section: Changes In Family Income Inequalitymentioning

confidence: 99%

Section: Measurement Issuesmentioning

confidence: 99%

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Inequality of Wage Rates, Earnings and Family Income in the United States, 1975-2002

2005

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“…Burkhauser and co-authors (Burkhauser, et al 2004;2007; Larrimore, et al 2008) have raised concerns about trends in income inequality because of changes in the way the Census top-codes income data for public release. Prior to 1995 the Census assigned top-coded data a common value (though this value varied across income sources, and at times, years), but starting in 1995 they assigned top-coded data the mean values of actual income based on broad demographic 1974-1975, 1975-1976, 1984-1985, and 1994-1995.…”

Section: Datamentioning

confidence: 99%

Earnings volatility in America: Evidence from matched CPS

Ziliak¹,

Hardy²,

Bollinger³

2011

Labour Economics

104

105

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Abstract:We offer new evidence on earnings volatility of men and women in the United States over the past four decades by using matched data from the March Current Population Survey.We construct a measure of total volatility that encompasses both permanent and transitory instability, and that admits employment transitions and losses from self employment. We also present a detailed decomposition of earnings volatility to account for changing shares in employment probabilities, conditional variances of continuous workers, and conditional mean variances from labor-force entry and exit. Our results show that earnings volatility among men increased by 15 percent from the early 1970s to mid 1980s, while women's volatility fell, and each stabilized thereafter. However, this pooled series masks important heterogeneity in volatility levels and trends across education groups and marital status. We find that men's earnings volatility is increasingly accounted for by employment transitions, especially exits, while the share of women's volatility accounted for by continuous workers rose, each of which highlights the importance of allowing for periods of non-work in volatility studies. 1Whether and to what extent the volatility of earnings and income have increased in the United States in recent decades has been the subject of much research and debate Moffitt 1994, 2009;Dynarski and Gruber 1997;Haider 2001; Kniesner and Ziliak 2002a,b;Gundersen and Ziliak 2003;Dahl, DeLeire, and Schwabish 2008;Dynan, Elmendorf, and Sichel 2008;Hacker and Jacobs 2008; Jensen and Shore 2008; Keys 2008;Shin and Solon 2008;Winship 2009). Starting with Gottschalk and Moffitt (1994), the focus on volatility trends centered on identifying whether rising cross-sectional income inequality stemmed in part from transitory instability, while in more recent years interest in volatility expanded to concerns raised by Hacker and Jacobs (2008), among others, that there have been fundamental changes in the labor market that shifted more idiosyncratic and business cycle risk onto individuals. Whereas the preponderance of evidence on inequality in the United States is based on cross-section data from the Current Population Survey (CPS), with few exceptions the evidence on earnings and income volatility comes almost exclusively from longitudinal data in the Panel Study of Income Dynamics (Gittleman and Joyce 1996;Cameron and Tracy 1998;Dahl, et al. 2008;Celik, et al. 2009; Juhn and McCue 2010;Winship 2011). In this paper we offer new evidence on earnings volatility over the past four decades by exploiting the longitudinal dimension of the CPS to match individuals across surveys.The use of the PSID for estimates of volatility owes in part to the literature's early emphasis on decomposing volatility into its permanent and transitory components (Gottschalk and Moffitt 1994). This decomposition is illustrative because it permits identification of temporary deviations of earnings from long-term trends, as well as identification of structural changes in long-term tre...

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“…However, as discussed above, this will confuse real changes in mean income with changes in reported income due to topcoding. As can be seen in Appendix Table 3 A more sophisticated approach discussed for labor earning by Burkhauser, Butler, Feng, and Houtenville (2004) and for income by Burkhauser, Couch, Houtenville and Rovba (2005) is to create a consistent topcode series. For each income source, this series takes the topcode that cuts most deeply into that source's income distribution in a given year and then chooses a topcode value that cuts that deeply into that source's income distribution in all other years.…”

Section: Methods To Correct For Topcoding Problemsmentioning

confidence: 99%

Trends in the Relative Household Income of Working-Age Men with Work Limitations: Correcting the Record Using Internal Current Population Survey Data

Burkhauser

Larrimore

2008

SSRN Journal

Self Cite

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Previous research measuring the economic well-being of working-age men with work limitations relative to such men without work limitations in the public use March Current Population Survey (CPS) systematically understates the mean household income of both groups; overstates the relative household income of those with work limitations; and understates the decline in their relative household income over time. Using the internal March CPS, we demonstrate this by creating a cell mean series beginning in 1975 that provides the mean reported income of all topcoded persons for each source of income in the public use March CPS data. Using our cell mean series with the public use March CPS, we closely match the yearly mean income of working-age men with and without work limitations over the period [1987][1988][1989][1990][1991][1992][1993][1994][1995][1996][1997][1998][1999][2000][2001][2002][2003][2004] in the internal data and show that this match is superior to ones using alternative methods of correcting for topcoding currently used in the disability literature. We then provide levels and trends in the relative income of working-age men with work limitations from 1980-2006, the earliest year in the March CPS that such comparisons can be made.

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Long term trends in earnings inequality: what the CPS can tell us

Abstract: Long term trends in earnings inequality:What the CPS can tell us

Cited by 39 publications

References 0 publications

Inequality of Wage Rates, Earnings and Family Income in the United States, 1975-2002

Inequality of Wage Rates, Earnings and Family Income in the United States, 1975-2002

Earnings volatility in America: Evidence from matched CPS

Trends in the Relative Household Income of Working-Age Men with Work Limitations: Correcting the Record Using Internal Current Population Survey Data

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