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Identification of Earning Dynamics using Rotating Samples over Short Periods: The Case of Chile

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  • Carlos Madeira

Abstract

Due to the absence of longitudinal data, empirical studies ignore labor income dynamics in developing economies, where earnings inequality is highest and social insurance is weakest. This work proposes a dynamic earnings process with two distinct shocks: unemployment spells and the wage of workers who stay employed. I then show this income process can be estimated from employment surveys with a rotating sample design, which are available for several countries. Applying this procedure to Chilean data I show wage volatility and unemployment rates are highly heterogeneous across workers. Unemployment spells are the most important source of earnings risk for workers.

Suggested Citation

  • Carlos Madeira, 2015. "Identification of Earning Dynamics using Rotating Samples over Short Periods: The Case of Chile," Working Papers Central Bank of Chile 754, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:754
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    References listed on IDEAS

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    Cited by:

    1. Sofía Bauducco & Gonzalo Castex & Andrew Davis, 2019. "The wealth distribution in developed and developing economies: comparing the United States to Chile using survey data from 2007," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 22(3), pages 154-203, December.
    2. Madeira, Carlos, 2019. "Measuring the covariance risk of consumer debt portfolios," Journal of Economic Dynamics and Control, Elsevier, vol. 104(C), pages 21-38.
    3. Carlos Madeira, 2022. "The double impact of deep social unrest and a pandemic: Evidence from Chile," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(S1), pages 135-171, February.
    4. Madeira, Carlos, 2018. "Explaining the cyclical volatility of consumer debt risk using a heterogeneous agents model: The case of Chile," Journal of Financial Stability, Elsevier, vol. 39(C), pages 209-220.
    5. Madeira, Carlos, 2019. "The impact of interest rate ceilings on households’ credit access: Evidence from a 2013 Chilean legislation," Journal of Banking & Finance, Elsevier, vol. 106(C), pages 166-179.
    6. Albagli, Elías & Chovar, Alejandra & Luttini, Emiliano & Madeira, Carlos & Naudon, Alberto & Tapia, Matias, 2023. "Labor market flows: Evidence for Chile using microdata from administrative tax records," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 4(4).
    7. Carlos Madeira, 2018. "Priorización de pago de deudas de consumo en Chile: el caso de bancos y casas comerciales," Notas de Investigación Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 21(1), pages 118-132, April.
    8. Madeira, Carlos, 2021. "The long term impact of Chilean policy reforms on savings and pensions," The Journal of the Economics of Ageing, Elsevier, vol. 19(C).
    9. Madeira, Carlos & Salazar, Leonardo, 2023. "The impact of monetary policy on a labor market with heterogeneous workers: The case of Chile," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 4(2).
    10. Agustín Arias & Juan Guerra-Salas, 2019. "Immigration in Emerging Countries: A Macroeconomic Perspective," Working Papers Central Bank of Chile 857, Central Bank of Chile.
    11. Carlos Madeira, 2016. "Explaining the Cyclical Volatility of Consumer Debt Risk," Working Papers Central Bank of Chile 772, Central Bank of Chile.
    12. Madeira, Carlos, 2023. "The evolution of consumption inequality and risk-insurance in Chile," Emerging Markets Review, Elsevier, vol. 54(C).
    13. Madeira, Carlos, 2022. "The impact of the Chilean pension withdrawals during the Covid pandemic on the future savings rate," Journal of International Money and Finance, Elsevier, vol. 126(C).

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