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Cross‐Sectional Variation In Individuals' Earnings Instability

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  • Scott Drewianka

Abstract

There has been considerable recent interest in earnings instability—the variability of workers' earnings around their expected earnings paths. While previous work has measured trends in instability, often to illuminate trends in inequality, this paper investigates the variation across workers. Data from the Panel Study of Income Dynamics reveal considerable differences in earnings instability across demographic and occupational characteristics, generally in accordance with prior expectations. These results can also be used to develop a person‐specific measure of instability for use in behavioral studies, and it is shown that the resulting metric correlates strongly with several decisions that are plausibly influenced by earnings risk.

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  • Scott Drewianka, 2010. "Cross‐Sectional Variation In Individuals' Earnings Instability," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(2), pages 291-326, June.
    • Handle: RePEc:bla:revinw:v:56:y:2010:i:2:p:291-326
    DOI: 10.1111/j.1475-4991.2009.00370.x
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