Job Changes and Wage Changes: Estimation with Measurement Error in a Binary Variable
Many studies of labour market dynamics use survey data so it is valuable to know about the quality of the data collected. This paper investigates job transitions in Ireland over the period 1995 to 2001, using the Living in Ireland Survey, the Irish component of the European Community Household Panel. In applied work on job mobility, researchers often have to rely on self-reported accounts of tenure to determine whether or not a job change has taken place. There may be measurement error in these responses and consequently observations may be misclassified. The paper finds that there are substantial inconsistencies or measurement error in the responses used to determine job changes so there is a risk of misclassifying cases as being job changes when truly they are job stays and vice versa. The paper explores the impact of misclassification in a model of job change using an estimator developed by Hausman, Abrevaya and Scott-Morton (1998). It finds that ignoring misclassification may substantially underestimate the true number of job changes and it can lead to diminished covariate effects. The paper then investigates the relationship between job mobility and wage growth. Misclassification in a binary explanatory variable causes attenuation in OLS estimates. A two-step approach to controlling for misclassification in job changes is adopted to estimate the wage effects of job mobility. The paper finds that controlling for misclassification has a substantial impact on the estimated effect of changing jobs on wage growth.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: Maynooth, Co. Kildare|
Web page: http://www.maynoothuniversity.ie/economics-finance-and-accounting
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dustmann C. & Van Soest A., 2004.
"An Analysis of Speaking Fluency of Immigrants Using Ordered Response Models With Classification Errors,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 22, pages 312-321, July.
- Dustmann, C. & van Soest, A.H.O., 2004. "An analysis of speaking fluency of immigrants using ordered response models with classification errors," Other publications TiSEM 48f7dd4a-ce90-4b0b-b71d-c, Tilburg University, School of Economics and Management.
- Pavlopoulos, Dimitris & Fouarge, Didier & Muffels, Ruud & Vermunt, Jeroen K., 2007. "Who benefits from a job change: The dwarfs or the giants?," IRISS Working Paper Series 2007-16, IRISS at CEPS/INSTEAD.
- Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
- Murphy, Kevin M & Topel, Robert H, 1985.
"Estimation and Inference in Two-Step Econometric Models,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 3(4), pages 370-79, October.
- Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
- Freeman, Richard B, 1984.
"Longitudinal Analyses of the Effects of Trade Unions,"
Journal of Labor Economics,
University of Chicago Press, vol. 2(1), pages 1-26, January.
- Richard B. Freeman, 1983. "Longitudinal Analyses of the Effects of Trade Unions," NBER Working Papers 1207, National Bureau of Economic Research, Inc.
- Freeman, Richard Barry, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Scholarly Articles 4631951, Harvard University Department of Economics.
- Dye, Richard F. & McMillen, Daniel P., 2007. "Teardowns and land values in the Chicago metropolitan area," Journal of Urban Economics, Elsevier, vol. 61(1), pages 45-63, January.
- Hausman, J. A. & Abrevaya, Jason & Scott-Morton, F. M., 1998. "Misclassification of the dependent variable in a discrete-response setting," Journal of Econometrics, Elsevier, vol. 87(2), pages 239-269, September.
- Duncan, Greg J & Hill, Daniel H, 1985. "An Investigation of the Extent and Consequences of Measurement Error in Labor-Economic Survey Data," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 508-32, October.
- Brown, James N & Light, Audrey, 1992. "Interpreting Panel Data on Job Tenure," Journal of Labor Economics, University of Chicago Press, vol. 10(3), pages 219-57, July.
- Davia, Maria A., 2005. "Job mobility and wage mobility at the beginning of the working career: a comparative view across Europe," ISER Working Paper Series 2005-03, Institute for Social and Economic Research.
- José Ignacio García Pérez & Yolanda Rebollo Sanz, 2004.
"Wage changes through job mobility in Europe: A multinomial endogenous switching approach,"
Economic Working Papers at Centro de Estudios Andaluces
E2004/70, Centro de Estudios Andaluces.
- Garcia Perez, Jose Ignacio & Rebollo Sanz, Yolanda, 2005. "Wage changes through job mobility in Europe: A multinomial endogenous switching approach," Labour Economics, Elsevier, vol. 12(4), pages 531-555, August.
- Gielen, Anne C., 2008.
"Repeated Job Quits: Stepping Stones or Learning about Quality?,"
IZA Discussion Papers
3838, Institute for the Study of Labor (IZA).
- Anne Gielen, 2013. "Repeated job quits: stepping stones or learning about quality?," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-22, December.
- Gielen Anne C., 2008. "Repeated Job Quits: Stepping stones or learning about quality?," ROA Research Memorandum 010, Maastricht University, Research Centre for Education and the Labour Market (ROA).
- Aprajit Mahajan, 2006. "Identification and Estimation of Regression Models with Misclassification," Econometrica, Econometric Society, vol. 74(3), pages 631-665, 05.
- Munasinghe, Lalith & Sigman, Karl, 2004. "A hobo syndrome? Mobility, wages, and job turnover," Labour Economics, Elsevier, vol. 11(2), pages 191-218, April.
- Ann P. Bartel & George J. Borjas, 1978.
"Wage Growth and Job Turnover: An Empirical Analysis,"
NBER Working Papers
0285, National Bureau of Economic Research, Inc.
- Ann P. Bartel & George J. Borjas, 1981. "Wage Growth and Job Turnover: An Empirical Analysis," NBER Chapters, in: Studies in Labor Markets, pages 65-90 National Bureau of Economic Research, Inc.
- Michael G. Abbott & Charles M. Beach, 1994. "Wage Changes and Job Changes of Canadian Women: Evidence from the 1986-87 Labour Market Activity Survey," Journal of Human Resources, University of Wisconsin Press, vol. 29(2), pages 429-460.
- Kristensen, Nicolai & Westergård-Nielsen, Niels C., 2004. "Does Low Job Satisfaction Lead to Job Mobility?," IZA Discussion Papers 1026, Institute for the Study of Labor (IZA).
- Jerry Hausman, 2001. "Mismeasured Variables in Econometric Analysis: Problems from the Right and Problems from the Left," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 57-67, Fall.
- Thomas J. Kane & Cecilia Elena Rouse & Douglas Staiger, 1999. "Estimating Returns to Schooling When Schooling is Misreported," NBER Working Papers 7235, National Bureau of Economic Research, Inc.
- Angrist, Joshua D. & Krueger, Alan B., 1999.
"Empirical strategies in labor economics,"
Handbook of Labor Economics,
in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366
- Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-79, July.
- Robert H. Topel & Michael P. Ward, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 439-479.
- Dustmann, C. & van Soest, A.H.O., 1998.
"Language Fluency and Earnings : Estimation with Misclassified Language Indicators,"
1998-120, Tilburg University, Center for Economic Research.
- Christian Dustmann & Arthur van Soest, 2001. "Language Fluency And Earnings: Estimation With Misclassified Language Indicators," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 663-674, November.
- Kristen Keith & Abagail McWilliams, 1999. "The Returns to Mobility and Job Search by Gender," ILR Review, Cornell University, ILR School, vol. 52(3), pages 460-477, April.
- Donald S. Kenkel & Dean R. Lillard & Alan D. Mathios, 2004. "Accounting for misclassification error in retrospective smoking data," Health Economics, John Wiley & Sons, Ltd., vol. 13(10), pages 1031-1044.
- Jacob Mincer, 1986. "Wage Changes in Job Changes," NBER Working Papers 1907, National Bureau of Economic Research, Inc.
- Frazis, Harley & Loewenstein, Mark A., 2003. "Estimating linear regressions with mismeasured, possibly endogenous, binary explanatory variables," Journal of Econometrics, Elsevier, vol. 117(1), pages 151-178, November.
- Christopher R. Bollinger, 2001. "Response Error and the Union Wage Differential," Southern Economic Journal, Southern Economic Association, vol. 68(1), pages 60-76, July.
- Farber, Henry S., 1999. "Mobility and stability: The dynamics of job change in labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 37, pages 2439-2483 Elsevier.
- Steven B. Caudill & Franklin G. Mixon, 2005. "Analysing Misleading Discrete Responses: A Logit Model Based on Misclassified Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(1), pages 105-113, 02.
- Alfons Palangkaraya & Elizabeth Webster & Paul H. Jensen, 2011. "Misclassification between Patent Offices: Evidence from a Matched Sample of Patent Applications," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 1063-1075, August.
- Audrey Light & Kathleen McGarry, 1998. "Job Change Patterns And The Wages Of Young Men," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 276-286, May.
- Aigner, Dennis J., 1973. "Regression with a binary independent variable subject to errors of observation," Journal of Econometrics, Elsevier, vol. 1(1), pages 49-59, March.
- Ureta, Manuelita, 1992. "The Importance of Lifetime Jobs in the U.S. Economy, Revisited," American Economic Review, American Economic Association, vol. 82(1), pages 322-35, March.
- Baum-Snow, Nathaniel & Neal, Derek, 2009. "Mismeasurement of usual hours worked in the census and ACS," Economics Letters, Elsevier, vol. 102(1), pages 39-41, January.
When requesting a correction, please mention this item's handle: RePEc:may:mayecw:n240-13.pdf. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.