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Measurement Error In Cross-Sectional and Longitudinal Labor Market Surveys: Results From Two Validation Studies

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  • John Bound
  • Charles Brown
  • Greg J. Duncan
  • Willard L Rodgers

Abstract

This paper reports evidence on the error properties of survey reports of labor market variables such as earnings and work hours. Our primary data source is the PSID Validation Study, a two-wave panel survey of a sample of workers employed by a large firm which also allowed us access to its very detailed records of its workers earnings. etc. The second data source uses individuals' 1977 and 1978 (March Current Population Survey) reports of earnings, matched to Social Security earnings records. In both data sets, individuals: reports of earnings are fairly accurately reported, and the errors are negatively related to true earnings. The latter property reduces the bias due to measurement error when earnings are used as an independent variable, but (unlike the classical-error case) leads to some bias when earnings are the dependent variable. Measurement-error-induced biases when change in earnings is the variable of interest are larger, but not dramatically so. Various measures of hourly earnings were much less reliable than annual earnings. Retrospective reports of unemployment showed considerable under-reporting, even of long spells.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2884.

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Date of creation: Mar 1989
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Publication status: published as J. Hartog, G. Ridder, and J. Teevwes, eds., Panel Data and Labor Market Studies, Elsevier, 1990, pp.1-19
Handle: RePEc:nbr:nberwo:2884

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  1. Mellow, Wesley & Sider, Hal, 1983. "Accuracy of Response in Labor Market Surveys: Evidence and Implications," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 1(4), pages 331-44, October.
  2. Mathiowetz, Nancy A & Duncan, Greg J, 1988. "Out of Work, Out of Mind: Response Errors in Retrospective Reports of Unemployment," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 6(2), pages 221-29, April.
  3. Joseph Altonji, 1984. "Intertemporal Substitution in Labor Supply: Evidence from Micro Data," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 562, Princeton University, Department of Economics, Industrial Relations Section..
  4. 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.
  5. Zvi Griliches & Jerry A. Hausman, 1984. "Errors in Variables in Panel Data," NBER Technical Working Papers 0037, National Bureau of Economic Research, Inc.
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