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Trends in the Transitory Variance of Male Earnings in the U.S., 1970-2004

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  • Robert A. Moffitt
  • Peter Gottschalk

Abstract

We estimate the trend in the transitory variance of male earnings in the U.S. using the Michigan Panel Study of Income Dynamics from 1970 to 2004. Using both an error components model as well as 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 thirty 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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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16833.

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Date of creation: Feb 2011
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Publication status: published as T re nds in th e T ra nsi tor y Var ia nce of Ma le Ear nin gs in t he U.S ., 19 70- 2004 . J our nal of Hum an Re sou rc es, Wi nte r, 2 012.
Handle: RePEc:nbr:nberwo:16833

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Cited by:
  1. Joseph Altonji, 2012. "Modeling Earnings Dynamics," 2012 Meeting Papers 1180, Society for Economic Dynamics.
  2. Paul Bingley & Lorenzo Cappellari & Niels Westergård-Nielsen, 2011. "Flexicurity, Wage Dynamics and Inequality over the Life-Cycle," CESifo Working Paper Series 3561, CESifo Group Munich.
  3. Jeffrey Brown & Chichun Fang & Francisco Gomes, 2012. "Risk and Returns to Education," NBER Working Papers 18300, National Bureau of Economic Research, Inc.
  4. Till van Treeck, 2012. "Did inequality cause the U.S. financial crisis?," IMK Working Paper 91-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  5. Magnac, Thierry & Pistolesi, Nicolas & Roux, Sébastien, 2013. "Post Schooling Human Capital Investments and the Life Cycle Variance of Earnings," IZA Discussion Papers 7407, Institute for the Study of Labor (IZA).

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