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Earnings Volatility Across Groups and Time

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  • Sabelhaus, John
  • Song, Jae

Abstract

Inferences about earnings volatility across groups and time depend on the underlying models of earnings dynamics, data sources, earnings concepts, and sampling strategies. In this paper we evaluate a model of earnings dynamics in which the permanence of shocks varies by age and education. This specification is consistent with observed earnings changes in administrative panel data, and also with the variance of earnings levels in multiple cross–section (synthetic panel) data. However, expanding the earnings concept to include self–employment and changing sampling strategy to include observations with minimal labor force attachment has first–order effects, and may help explain why some studies conclude that earnings volatility is rising.

Suggested Citation

  • Sabelhaus, John & Song, Jae, 2009. "Earnings Volatility Across Groups and Time," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(2), pages 347-364, June.
    • Handle: RePEc:ntj:journl:v:62:y:2009:i:2:p:347-64
    DOI: 10.17310/ntj.2009.2.07
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    References listed on IDEAS

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    1. Robert Moffitt & Peter Gottschalk, 2008. "Trends in the Transitory Variance of Male Earnings in the U.S., 1970-2004," Boston College Working Papers in Economics 697, Boston College Department of Economics.
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    Cited by:

    1. Jason DeBacker & Bradley Heim & Vasia Panousi & Shanthi Ramnath & Ivan Vidangos, 2013. "Rising Inequality: Transitory or Persistent? New Evidence from a Panel of U.S. Tax Returns," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(1 (Spring), pages 67-142.
    2. Robert Moffitt & John Abowd & Christopher Bollinger & Michael Carr & Charles Hokayem & Kevin McKinney & Emily Wiemers & Sisi Zhang & James Ziliak, 2022. "Reconciling Trends in U.S. Male Earnings Volatility: Results from Survey and Administrative Data," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 41(1), pages 1-11, December.
    3. Yi Wen, 2011. "Making sense of China’s astronomical foreign reserves," Working Papers 2011-018, Federal Reserve Bank of St. Louis.
    4. Sebastian Devlin-Foltz & John Edward Sabelhaus, 2015. "Heterogeneity in Economic Shocks and Household Spending," Finance and Economics Discussion Series 2015-49, Board of Governors of the Federal Reserve System (U.S.).
    5. Samuel Ackerman & John Edward Sabelhaus, 2012. "The effect of self-reported transitory income shocks on household spending," Finance and Economics Discussion Series 2012-64, Board of Governors of the Federal Reserve System (U.S.).
    6. Till Treeck, 2014. "Did Inequality Cause The U.S. Financial Crisis?," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 421-448, July.
    7. Rémi Bazillier & Jérôme Hericourt, 2017. "The Circular Relationship Between Inequality, Leverage, And Financial Crises," Journal of Economic Surveys, Wiley Blackwell, vol. 31(2), pages 463-496, April.
    8. Rémi Bazillier & Jérôme Hericourt, 2017. "The Circular Relationship Between Inequality, Leverage, And Financial Crises," Journal of Economic Surveys, Wiley Blackwell, vol. 31(2), pages 463-496, April.
    9. John Coglianese & Brendan M. Price, 2020. "Income in the Off-Season: Household Adaptation to Yearly Work Interruptions," Upjohn Working Papers 20-337, W.E. Upjohn Institute for Employment Research.
    10. Mariacristina De Nardi, 2015. "Quantitative Models of Wealth Inequality: A Survey," NBER Working Papers 21106, National Bureau of Economic Research, Inc.
    11. Andre Neveu, 2015. "Earnings Volatility Trends and the Great Moderation: A Multifactor Residual Approach," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(2), pages 229-245, June.
    12. 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.
    13. Keshav Dogra & Olga Gorbachev, 2016. "Consumption Volatility, Liquidity Constraints and Household Welfare," Economic Journal, Royal Economic Society, vol. 126(597), pages 2012-2037, November.
    14. Jason M. DeBacker & Bradley T. Heim & Vasia Panousi & Ivan Vidangos, 2011. "Rising inequality: transitory or permanent? New evidence from a U.S. panel of household income 1987-2006," Finance and Economics Discussion Series 2011-60, Board of Governors of the Federal Reserve System (U.S.).
    15. Carr, Michael D. & Wiemers, Emily E., 2021. "The role of low earnings in differing trends in male earnings volatility," Economics Letters, Elsevier, vol. 199(C).
    16. Mariacristina De Nardi & Giulio Fella, 2017. "Saving and Wealth Inequality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 26, pages 280-300, October.
    17. Sabelhaus, John & Song, Jae, 2010. "The great moderation in micro labor earnings," Journal of Monetary Economics, Elsevier, vol. 57(4), pages 391-403, May.
    18. Mons Chan & Ming Xu & Sergio Salgado, 2019. "Heterogeneous Passthrough from TFP to Wages," 2019 Meeting Papers 1447, Society for Economic Dynamics.
    19. van Treeck, Till. & Sturn, Simon., 2012. "Income inequality as a cause of the Great Recession? : A survey of current debates," ILO Working Papers 994709343402676, International Labour Organization.
    20. Jacob Krimmel & Kevin B. Moore & John Edward Sabelhaus & Paul A. Smith, 2013. "The current state of U.S. household balance sheets," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 337-359.

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