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Income Volatility and the PSID: Past Research and New Results

Author

Listed:
  • Robert Moffitt

    () (Johns Hopkins)

  • Sisi Zhang

    (The Urban Institute)

Abstract

The Panel Study of Income Dynamics (PSID) has made more contributions to the study of income volatility than any other data set in the U.S. Its record of research is truly seminal. In this paper we first present the reasons that the PSID has made such major contributions to research on the topic. Then we review the major papers that have used the PSID to study income volatility and we compare their results to those using other data sets. Lastly, we present new results for male earnings volatility through 2014. We find that both gross volatility and the component consisting of only the variance of transitory shocks have experienced a large increase during the Great Recession after following similar trends to those previously established showing upward trends from the 1970s to the 1980s followed by a stable period until the Recession.

Suggested Citation

  • Robert Moffitt & Sisi Zhang, 2018. "Income Volatility and the PSID: Past Research and New Results," Working Papers 2018-016, Human Capital and Economic Opportunity Working Group.
  • Handle: RePEc:hka:wpaper:2018-016
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    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Moffitt_Zhang_2018_income-volatility-PSID.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    male earnings volatility; transitory shocks; Great Recession; PSID; history;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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