Applied microeconomic researchers are beginning to use long-term retrospective survey data in settings where conventional longitudinal survey data are unavailable. However, inaccurate longterm recall could induce non-classical measurement error, for which conventional statistical corrections are less effective. In this paper, we use the unique Panel Study of Income Dynamics Validation Study to assess the accuracy of long-term retrospective recall data. We find underreporting of transitory variation which creates a non-classical measurement error problem.
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number
CIRJE-F-658.