Understanding Earnings Instability: How Important are Employment Fluctuations and Job Changes?
AbstractUsing three panel datasets (the matched CPS, the SIPP, and the newly available Longitudinal Employment and Household Dynamics (LEHD) data), we examine trends in male earnings instability in recent decades. In contrast to several papers that find a recent upward trend in earnings instability using the PSID data, we find that earnings instability has been remarkably stable in the 1990s and the 2000s. We find that job changing rates remained relatively constant casting doubt on the importance of labor market “churning.” We find some evidence that earnings instability increased among job stayers which lends credence to the view that greater reliance on incentive pay increased instability of worker pay. We also find an offsetting decrease in earnings instability among job changers due largely to declining unemployment associated with job changes. One caveat to our findings is that we focus on men who have positive earnings in two adjacent years and thus ignore men who exit the labor force or re-enter after an extended period. Preliminary investigation suggests that ignoring these transitions understates the rise in earnings instability over the past two decades.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 09-20.
Length: 37 pages
Date of creation: Aug 2009
Date of revision:
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Donggyun Shin & Gary Solon, 2008.
"Trends in Men's Earnings Volatility: What Does the Panel Study of Income Dynamics Show?,"
NBER Working Papers
14075, National Bureau of Economic Research, Inc.
- Shin, Donggyun & Solon, Gary, 2011. "Trends in men's earnings volatility: What does the Panel Study of Income Dynamics show?," Journal of Public Economics, Elsevier, vol. 95(7), pages 973-982.
- Shin, Donggyun & Solon, Gary, 2011. "Trends in men's earnings volatility: What does the Panel Study of Income Dynamics show?," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 973-982, August.
- Lorenzo Cappellari & Marco Leonardi, 2013.
"Earnings Instability and Tenure,"
CESifo Working Paper Series
4145, CESifo Group Munich.
- Lorenzo Cappellari & Marco Leonardi, 2007. "Earnings Instability and Tenure," DISCE - Quaderni dell'Istituto di Economia dell'Impresa e del Lavoro ieil0048, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
- Cappellari, Lorenzo & Leonardi, Marco, 2006. "Earnings Instability and Tenure," IZA Discussion Papers 2527, Institute for the Study of Labor (IZA).
- Cappellari, Lorenzo & Leonardi, Marco, 2007. "Earnings instability and tenure," ISER Working Paper Series 2007-04, Institute for Social and Economic Research.
- Ziliak, James P. & Hardy, Bradley & Bollinger, Christopher, 2011. "Earnings volatility in America: Evidence from matched CPS," Labour Economics, Elsevier, vol. 18(6), pages 742-754.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fariha Kamal).
If references are entirely missing, you can add them using this form.