Working Paper: NBER ID: w1832
Authors: John M. Abowd; David Card
Abstract: This paper presents an empirical analysis of changes in individual earnings and hours over time. Using longitudinal data from three panel surveys,we catalogue the main features of the covariance structure of changes in earnings and hours. We then present an interpretation of these features in terms of both a life-cycle labor supply model and a fixed-wage labor contract model. Our major findings are:(1) there is a remarkable similarity in the covariance structure of earnings and hours changes across the three surveys; and (2) apart from simple measurement error, the major component of variance in earnings and hours affects earnings and hours equi-proportionately.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| changes in earnings (J31) | changes in hours (J22) |
| changes in hours (J22) | changes in earnings (J31) |
| changes in earnings and hours (J31) | common underlying mechanism (D87) |
| variance in earnings (J31) | variance in hours (C29) |