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Estimating Trends in Male Earnings Volatility with the Panel Study of Income Dynamics

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  • Robert Moffitt
  • Sisi Zhang

Abstract

The Panel Study of Income Dynamics (PSID) has been the workhorse dataset used to estimate trends in U.S. earnings volatility at the individual level. We provide updated estimates for male earnings volatility using additional years of data. The analysis confirms prior work showing upward trends in the 1970s and 1980s, with a near doubling of the level of volatility over that period. The results also confirm prior work showing a resumption of an upward trend starting in the 2000s, but the new years of data available show volatility to be falling in recent years. By 2018, volatility had grown by a modest amount relative to the 1990s, with a growth rate only one-fifth the magnitude of that in the 1970s and 1980s. We show that neither attrition or item nonresponse bias, nor other issues with the PSID, affect these conclusions.

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  • Robert Moffitt & Sisi Zhang, 2022. "Estimating Trends in Male Earnings Volatility with the Panel Study of Income Dynamics," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 41(1), pages 20-25, December.
    • Handle: RePEc:taf:jnlbes:v:41:y:2022:i:1:p:20-25
    DOI: 10.1080/07350015.2022.2102024
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    3. James P. Ziliak & Charles Hokayem & Christopher R. Bollinger, 2022. "Trends in Earnings Volatility Using Linked Administrative and Survey Data," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 41(1), pages 12-19, December.
    4. Koşar, Gizem & van der Klaauw, Wilbert, 2023. "Workers' Perceptions of Earnings Growth and Employment Risk," IZA Discussion Papers 16013, Institute of Labor Economics (IZA).
    5. Edmund Crawley & Martin Holm & Håkon Tretvoll, 2022. "A Parsimonious Model of Idiosyncratic Income," Finance and Economics Discussion Series 2022-026, Board of Governors of the Federal Reserve System (U.S.).
    6. Michael D. Carr & Robert A. Moffitt & Emily E. Wiemers, 2020. "Reconciling Trends in Volatility: Evidence from the SIPP Survey and Administrative Data," NBER Working Papers 27672, National Bureau of Economic Research, Inc.
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    9. Carr, Michael D. & Wiemers, Emily E., 2021. "The role of low earnings in differing trends in male earnings volatility," Economics Letters, Elsevier, vol. 199(C).
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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