Working Paper: NBER ID: w29737
Authors: Robert A. Moffitt; John M. Abowd; Christopher R. Bollinger; Michael D. Carr; Charles M. Hokayem; Kevin L. McKinney; Emily E. Wiemers; Sisi Zhang; James P. Ziliak
Abstract: One strand of the literature in labor economics, household finance, and macroeconomics has studied whether individual earnings volatility has risen or fallen in the U.S. over the last several decades. There are disagreements in the empirical literature on this question, with some suggestions that the differences are the result of using flawed survey data instead of more accurate administrative data. This paper summarizes the results of a project to reconcile these findings with four different data sets and six different data series--three survey and three administrative data series, including two which match survey respondent data to their administrative data. Four of the six series show no significant trend in male earnings volatility over the last 20-to-30+ years when differences across the data sets are properly accounted for. A fifth shows a positive net trend but small in magnitude. A sixth shows no net trend 1998-2011 and only a small decline thereafter. The remaining differences across data series can be largely explained by differences in the left tail of their cross-sectional earnings distributions. We conclude that the data sets we have analyzed show little evidence of any significant trend in male earnings volatility since the mid-1980s.
Keywords: Earnings Volatility; Labor Economics; Administrative Data; Survey Data
JEL Codes: C23; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| data source types (survey vs. administrative data) (C83) | findings on earnings volatility trends (G17) |
| reporting errors or attrition (C83) | discrepancies in findings (C90) |
| variations in the left tail of the cross-sectional earnings distributions (D39) | remaining differences in findings (C90) |
| differences in data sets (C55) | no significant trend in male earnings volatility (J31) |
| alignment of distributions (C46) | closer volatility levels (E39) |
| differences in the left tail of earnings distributions (D39) | small differences in trends (C22) |