Trends in the covariance structure of earnings in the U.S.: 1969–1987

Moffitt, Robert A.; Gottschalk, Peter

doi:10.1007/s10888-010-9154-z

Cited by 80 publications

(102 citation statements)

References 15 publications

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“…Formally, earnings, it y , are written as  respectively; p t and λ t are 'factor loadings' that allow these variances to change over time in a way that is common across individuals. The inclusion of these factor loadings was an important innovation in models of earnings dynamics and allowed for the existence of structural shifts by calendar time in the earnings process (Moffitt and Gottschalk (1995) (5a) and (5b) captures most of the important features of earnings dynamics, namely timevarying parameters and serial correlation of the transitory shocks. Furthermore, and as discussed in more detail later, the key issues that we raise in this paper turn out to be central to the identification of more elaborate models as well, so that the lessons learned from our analysis carry over to the more complicated models .…”

Section: The Gmm Approach To Estimating Earnings Covariance Structuresmentioning

confidence: 99%

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Identification of the covariance structure of earnings using the GMM estimator

2012

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In this paper we study the performance of the GMM estimator in the context of the covariance structure of earnings. Using analytical and Monte Carlo techniques we examine the sensitivity of parameter identification to key features such as panel length, sample size, the degree of persistence of earnings shocks and the evolution of inequality over time. We show that the interaction of transitory persistence with the time pattern of inequality determines identification in these models and offer some practical recommendations that follow from our findings.

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Section: The Gmm Approach To Estimating Earnings Covariance Structuresmentioning

confidence: 99%

“…Moffitt and Gottschalk (1995, 2002, Dickens (2000), Haider (2001), Ramos (2002), Baker and Solon (2003), Capellari (2004), Gustavsson (2004, Daly and Valetta (2007) and Kalwij and Alessie (2007)). 1 In these models, earnings are written as the sum of permanent and transitory components.…”

Section: Introductionmentioning

confidence: 99%

Identification of the covariance structure of earnings using the GMM estimator

2012

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“…Papers developing these variance components models of earnings include Abowd and Card (1989), Baker (1997), Baker and Solon (2003), Haider (2001), Hause (1980), Lillard and Weiss (1979), MaCurdy (1982), and Moffitt and Gottschalk (1995. There have been few applications to broader measures of income: notable exceptions are Biewen (2003), Stevens (1999), and earlier work by Duncan (1983).…”

Section: Variance Component Modellingmentioning

confidence: 99%

Spaghetti Unravelled: A Model-Based Description of Differences in Income-Age Trajectories

Jenkins¹

2011

Changing Fortunes

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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 Non-Technical SummaryMost descriptions of the income-age relationship are based on comparisons of income across age groups in a particular year and are based on cross-sectional data. In contrast, this paper has taken a longitudinal approach, deriving trajectory estimates using 17 waves of data from the British Household Panel Survey. I propose a framework that provides summary descriptions of not only the way in which incomes among groups of similar individuals change with age on average, but also the way in which trajectories for individuals diverge from the average trajectory of their group. The model is applied to three measures of 'income': the hourly wage, total individual income from all sources, and equivalized net household income. The paper's main points are as follows:• Individuals' income-age trajectories collectively look like cooked spaghetti -they are a complex mix of wiggly lines.• We can, however, use a statistical model to summarize the key features of these trajectories and to highlight differences across groups on average and within groups of individuals with similar characteristics.• Across twelve social groups defined in terms of combinations of sex, birth cohort, and educational qualifications, there are some clear differences in average income-age trajectories, regardless of which income measure is used.• Other things equal, the average income-age profile for men lies above that for women; the one for individuals born in or after 1955 is above that for those born before 1955; and the that for individuals with educational qualifications to A-level or higher is above that for individuals with some qualifications which, in turn, is above the profile for individuals with no educational qualifications. There is a distinct dip in income growth for women on average over the age range when many have children.• Average income-age trajectories derived from longitudinal data look different from those derived from cross-sectional data. For hourly wages for instance, trajectories at the beginning of the working life are steeper -wage growth is greater -according to longitudinal data.• 'Average' trajectories are potential misleading. Within each social group, there are substantial differences across individuals in the shapes of income-age trajectories, where differences can be usefully summarised in terms of: 1. Individual-specific differences in incomes at the start of the working life; 2. Individual-specific differences in income growth rates; and 3. A close association between initial incomes and income growth rates -those with a lower initial income experience greate...

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“…This paper shows that early in marriage, particular when young children are present, couples' incomes are 1 Papers on this subject include Hall and Mishkin (1982); Gottschalk and Moffitt (1994); Moffitt and Gottschalk (2011); Daly and Duncan (1997); Carroll and Samwick (1997); Dynarski and Gruber (1997); Cameron and Tracy (1998); Geweke and Keane (2000); Haider (2001); Gottschalk and Moffitt (2002); Batchelder (2003); Hacker (2006); Comin et al (2009); Gottschalk and Moffitt (2006;Hertz (2006); Winship (2007); Bollinger et al(2009); Leete and Bania (2010); Dahl et al (2007); Shin and Solon (2011). 2 Alternatively marriage could make income volatility for husbands and wives more similar than it would have been had they not wed. negatively correlated.…”

Section: Introductionmentioning

confidence: 99%

The co-movement of couples’ incomes

Shore

2013

Rev Econ Household

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While there is a large literature on how individual incomes move over time, we know much less about couples' joint income dynamics. Current research on individual income dynamics has increasingly considered heterogeneity-do all individuals' incomes evolve in the same way, or does a particular individual's income evolve in the same way throughout their life? This paper considers the analogous questions for couples-do all couples' incomes move together in the same way, or does a particular couple's incomes move together in the same way throughout their marriage? In particular, I find evidence of correlated volatility; husbands with volatile incomes tend to have wives with volatile ones. I find weaker evidence for heterogeneity in the correlation of husbands' and wives' income changes, with some couples incomes moving together while others moving in opposite directions. Couples' income changes are negatively correlated early in marriage, particularly when young children are present, and become more positively correlated over time.

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Trends in the covariance structure of earnings in the U.S.: 1969–1987

Cited by 80 publications

References 15 publications

Identification of the covariance structure of earnings using the GMM estimator

Identification of the covariance structure of earnings using the GMM estimator

Spaghetti Unravelled: A Model-Based Description of Differences in Income-Age Trajectories

The co-movement of couples’ incomes

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