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U.S. Earnings Mobility: Comparing Survey-Based and Administrative-Based Estimates

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  • Lisa M. Dragoset

    (U.S. Census Bureau and Cornell University)

  • Gary S. Fields

    (Cornell University)

Abstract

Earnings mobility has been studied both at the macro level (how much of a certain kind of mobility is there in the economy?) and at the micro level (what are the correlates of change in income or position?). Many empirical mobility studies provide estimates of the amount of mobility in a country over time and the correlates of individual mobility within the income distribution. While measurement error is recognized as potentially important at both these levels, very little is known about the degree to which earnings mobility estimates are affected by measurement error. In this paper, we use a new dataset that contains individually reported total annual labor earnings from the Survey of Income and Program Participation (SIPP) linked to employer-reported total annual labor earnings from the Social Security Administration’s Detailed Earnings Record (DER; these are taken directly from Box 1 on theW-2 form and are not capped by FICA) to compare micro and macro earnings mobility estimates for the U.S. during the 1990s using the two different earnings measures. We ask how much difference it makes to mobility estimates to use administrative-based earnings rather than survey-based earnings, and we obtain two major findings. Qualitatively, we find that the results are similar but not identical when administrative-based earnings are used rather than survey-based earnings. Quantitatively, we find that magnitudes are often very different when administrative-based earnings are used rather than survey-based earnings. The administrative-based results are neither systematically larger nor systematically smaller than the survey-based ones.

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File URL: http://www.ecineq.org/milano/WP/ECINEQ2006-55.pdf
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Bibliographic Info

Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 55.

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Length: 39 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2006-55

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Keywords: earnings mobility; measurement error; macro mobility; micro mobility.;

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References

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  1. Moshe Buchinsky & Jennifer Hunt, 1999. "Wage Mobility In The United States," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 351-368, August.
  2. Pischke, Jorn-Steffen, 1995. "Measurement Error and Earnings Dynamics: Some Estimates from the PSID Validation Study," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 13(3), pages 305-14, July.
  3. Richard V. Burkhauser & Douglas Holtz-Eakin & Stephen E. Rhody, 1997. "Labor Earnings Mobility and Inequality in the United States and Germany During the Growth Years of the 1980s," NBER Working Papers 5988, National Bureau of Economic Research, Inc.
  4. Bigard, A & Guillotin, Y & Lucifora, C, 1998. "Earnings Mobility: An International Comparison of Italy and France," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 44(4), pages 535-54, December.
  5. Francisca Antman & David J. McKenzie, 2007. "Earnings Mobility and Measurement Error: A Pseudo-Panel Approach," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 56, pages 125-161.
  6. Hungerford, Thomas L, 1993. "U.S. Income Mobility in the Seventies and Eighties," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 403-17, December.
  7. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, Elsevier, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
  8. Bound, John, et al, 1994. "Evidence on the Validity of Cross-Sectional and Longitudinal Labor Market Data," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 12(3), pages 345-68, July.
  9. Fields, Gary S. & Cichello, Paul & Freije, Samuel & Menéndez, Marta & Newhouse, David, 2003. "For Richer or for Poorer ? Evidence from Indonesia, South Africa, Spain, and Venezuela," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/1560, Paris Dauphine University.
  10. Fields, Gary S & Ok, Efe A, 1999. "Measuring Movement of Incomes," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 66(264), pages 455-71, November.
  11. John Bound & Alan B. Krueger, 1989. "The Extent of Measurement Error In Longitudinal Earnings Data: Do Two Wrongs Make A Right?," NBER Working Papers 2885, National Bureau of Economic Research, Inc.
  12. Buchinsky, Mosche & Fields, Gary S & Fougère, Denis & Kramarz, Francis, 2003. "Francs or Ranks? Earnings Mobility in France, 1967-1999," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3937, C.E.P.R. Discussion Papers.
  13. John Abowd & Martha Stinson, 2011. "Estimating Measurement Error in SIPP Annual Job Earnings: A Comparison of Census Bureau Survey and SSA Administrative Data," Working Papers, Center for Economic Studies, U.S. Census Bureau 11-20, Center for Economic Studies, U.S. Census Bureau.
  14. Bonggeun Kim & Gary Solon, 2005. "Implications of Mean-Reverting Measurement Error for Longitudinal Studies of Wages and Employment," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 193-196, February.
  15. Fields, Gary S. & Cichello, Paul & Freije, Samuel & Menéndez, Marta & Newhouse, David, 2003. "Household income dynamics : a four-country story," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/1562, Paris Dauphine University.
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  17. Fields, Gary S. & Duval Hernández, Robert & Freije-Rodriguez, Samuel & Sanchez Puerta, Maria Laura, 2007. "Earnings Mobility in Argentina, Mexico, and Venezuela: Testing the Divergence of Earnings and the Symmetry of Mobility Hypotheses," IZA Discussion Papers 3184, Institute for the Study of Labor (IZA).
  18. Peter Gottschalk & Robert Moffitt, 1994. "The Growth of Earnings Instability in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 217-272.
  19. Duncan, Greg J & Hill, Daniel H, 1985. "An Investigation of the Extent and Consequences of Measurement Error in Labor-Economic Survey Data," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 3(4), pages 508-32, October.
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Cited by:
  1. JENKINS Stephen P. & VAN KERM Philippe, 2011. "Trends in individual income growth: measurement methods and British evidence," CEPS/INSTEAD Working Paper Series 2011-21, CEPS/INSTEAD.

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