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Trends in the Transitory Variance of Male Earnings: Methods and Evidence

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  • Robert A. Moffitt
  • Peter Gottschalk

Abstract

We estimate the trend in the transitory variance of male earnings in the United States using the Michigan Panel Study of Income Dynamics from 1970 to 2004. Using an error components model and simpler but only approximate methods, we find that the transitory variance started to increase in the early 1970s, continued to increase through the mid-1980s, and then remained at this new higher level through the 1990s and beyond. Thus the increase mostly occurred about 30 years ago. Its increase accounts for between 31 and 49 percent of the total rise in cross-sectional variance, depending on the time period.

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File URL: http://jhr.uwpress.org/cgi/reprint/47/1/204
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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 47 (2012)
Issue (Month): 1 ()
Pages: 204-236

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Handle: RePEc:uwp:jhriss:v:46:y:2012:i:1:p:204-236

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Web page: http://jhr.uwpress.org/

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Cited by:
  1. Stéphane Bonhomme & Koen Jochmans & Jean-Marc Robin, 2013. "Nonparametric estimation of finite mixtures," Sciences Po Economics Discussion Papers 2013-09, Sciences Po Departement of Economics.
  2. Markus Jäntti & Stephen P. Jenkins, 2013. "Income Mobility," SOEPpapers on Multidisciplinary Panel Data Research 607, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Jonathan A. Schwabish & Julie H. Topoleski, 2013. "Modeling Individual Earnings in CBO’s Long-Term Microsimulation Model: Working Paper 2013-04," Working Papers 44306, Congressional Budget Office.
  4. Cappellari, Lorenzo & Jenkins, Stephen P., 2013. "Earnings and Labour Market Volatility in Britain," IZA Discussion Papers 7491, Institute for the Study of Labor (IZA).
  5. Blundell, Richard & Graber, Michael & Mogstad, Magne, 2014. "Labor Income Dynamics and the Insurance from Taxes, Transfers, and the Family," IZA Discussion Papers 7916, Institute for the Study of Labor (IZA).

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