TY - JOUR
T1 - Reconciling Trends in U.S. Male Earnings Volatility
T2 - Results from Survey and Administrative Data
AU - Moffitt, Robert
AU - Abowd, John
AU - Bollinger, Christopher
AU - Carr, Michael
AU - Hokayem, Charles
AU - McKinney, Kevin
AU - Wiemers, Emily
AU - Zhang, Sisi
AU - Ziliak, James
N1 - Publisher Copyright:
© 2022 American Statistical Association.
PY - 2022
Y1 - 2022
N2 - There is a large literature on earnings and income volatility in labor economics, household finance, and macroeconomics. One strand of that literature has studied whether individual earnings volatility has risen or fallen in the United States over the last several decades. There are strong disagreements in the empirical literature on this important question, with some studies showing upward trends, some showing downward trends, and some showing no trends. Some studies have suggested that the differences are the result of using flawed survey data instead of more accurate administrative data. This article summarizes the results of a project attempting to reconcile these findings with four different datasets and six different data series—three survey and three administrative data series, including two which match survey respondent data to their administrative data. Using common specifications, measures of volatility, and other treatments of the data, four of the six data series show a lack of any significant long-term trend in male earnings volatility over the last 20-to-30+ years when differences across the datasets are properly accounted for. A fifth data series (the PSID) shows a positive net trend but small in magnitude. A sixth, administrative, dataset, available only since 1998, shows no net trend 1998–2011 and only a small decline thereafter. Many of the remaining differences across data series can be explained by differences in their cross-sectional distribution of earnings, particularly differences in the size of the lower tail. We conclude that the datasets we have analyzed, which include many of the most important available, show little evidence of any significant trend in male earnings volatility since the mid-1980s.
AB - There is a large literature on earnings and income volatility in labor economics, household finance, and macroeconomics. One strand of that literature has studied whether individual earnings volatility has risen or fallen in the United States over the last several decades. There are strong disagreements in the empirical literature on this important question, with some studies showing upward trends, some showing downward trends, and some showing no trends. Some studies have suggested that the differences are the result of using flawed survey data instead of more accurate administrative data. This article summarizes the results of a project attempting to reconcile these findings with four different datasets and six different data series—three survey and three administrative data series, including two which match survey respondent data to their administrative data. Using common specifications, measures of volatility, and other treatments of the data, four of the six data series show a lack of any significant long-term trend in male earnings volatility over the last 20-to-30+ years when differences across the datasets are properly accounted for. A fifth data series (the PSID) shows a positive net trend but small in magnitude. A sixth, administrative, dataset, available only since 1998, shows no net trend 1998–2011 and only a small decline thereafter. Many of the remaining differences across data series can be explained by differences in their cross-sectional distribution of earnings, particularly differences in the size of the lower tail. We conclude that the datasets we have analyzed, which include many of the most important available, show little evidence of any significant trend in male earnings volatility since the mid-1980s.
KW - Panel data
KW - Sensitivity analysis
KW - Sensitivity testing
KW - Volatility
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U2 - 10.1080/07350015.2022.2102020
DO - 10.1080/07350015.2022.2102020
M3 - Comment/Debate/Erratum
AN - SCOPUS:85138293541
SN - 0735-0015
VL - 41
SP - 1
EP - 11
JO - Journal of Business and Economic Statistics
JF - Journal of Business and Economic Statistics
IS - 1
ER -