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Measuring Employment and Income for Low-Income Populations with Administrative and Survey Data

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  • V. J. Hotz
  • J. K. Scholz

Abstract

We discuss the strengths and weaknesses of income and employment data in national surveys, in unemployment insurance (UI) wage records, and in tax returns. The CPS, SIPP, NLS, and PSID surveys provide valuable information on the behavior of the low-income population. They have broad and fairly accurate measures of income for national samples, and their focus on families as the unit of analysis and their ease of access greatly enhance their value. The value of these data sets for evaluating welfare reform is severely limited, however. With the devolution of responsibility for TANF, the CPS and SIPP sampling frames and sample sizes mean that, at best, they can be only supplementary data sources for understanding the effects of welfare reform at the state and local levels. The apparent decline in program coverage in the CPS is also worrisome. UI data are available at the state level and can be matched to individuals in existing samples at relatively low cost. It is straightforward to do follow-up analyses on income and employment for workers who remain in the state, and UI data are timely. However, earnings are available only for individuals, while changes in family composition upon exit from welfare have been shown to have a large bearing on economic well-being. UI data do not allow us to track these changes. There also appears to be a substantial problem with some workers being classified as independent contractors and hence not entering the UI system. Overall gaps in coverage appear to be at least 13 percent and may be significantly higher. Even when wages are reported, there is some evidence that they are understated by a significant amount. We also present evidence on the degree to which tax data can be used to understand the incomes and employment of low-skilled workers. The paper concludes with brief recommendations for future research that might help fill some of the gaps we have identified.

Suggested Citation

  • V. J. Hotz & J. K. Scholz, "undated". "Measuring Employment and Income for Low-Income Populations with Administrative and Survey Data," Institute for Research on Poverty Discussion Papers 1224-01, University of Wisconsin Institute for Research on Poverty.
  • Handle: RePEc:wop:wispod:1224-01
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    File URL: http://www.irp.wisc.edu/publications/dps/pdfs/dp122401.pdf
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    References listed on IDEAS

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    1. Carolyn J. Hill & V. Joseph Hotz & Charles H. Mullin & John Karl Scholz, 1999. "EITC Eligibility, Participation, and Compliance Rates for AFDC Households: Evidence from the California Caseload," JCPR Working Papers 102, Northwestern University/University of Chicago Joint Center for Poverty Research.
    2. Greenberg, David & Halsey, Harlan, 1983. "Systematic Misreporting and Effects of Income Maintenance Experiments on Work Effort: Evidence from the Seattle-Denver Experiment," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 380-407, October.
    3. Blakemore, Arthur E, et al, 1996. "Employer Tax Evasion in the Unemployment Insurance Program," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 210-230, April.
    4. Daniel H. Weinberg, 1999. "Fifty Years of U.S. Income Data from the Current Population Survey: Alternatives, Trends, and Quality," American Economic Review, American Economic Association, vol. 89(2), pages 18-22, May.
    5. Katharine G. Abraham & James R. Spletzer & Jay C. Stewart, 1998. "Divergent Trends in Alternative Wage Series," NBER Chapters,in: Labor Statistics Measurement Issues, pages 293-325 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Mueser, Peter R. & Stevens, David W. & Troske, Kenneth, 2007. "The Impact of Welfare Reform on Leaver Characteristics, Employment and Recidivism: An Analysis of Maryland and Missouri," IZA Discussion Papers 3131, Institute for the Study of Labor (IZA).
    2. Geoffrey L. Wallace & Robert Haveman, 2007. "The implications of differences between employer and worker employment|earnings reports for policy evaluation," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 26(4), pages 737-754.
    3. V. Joseph Hotz & Charles H. Mullin & John Karl Scholz, 2001. "The Earned Income Tax Credit and Labor Market Participation of Families on Welfare," JCPR Working Papers 214, Northwestern University/University of Chicago Joint Center for Poverty Research.
    4. Liming Yao & Michael White & Alla Koblyakova, 2015. "House price appreciation and housing affordability: a study of younger households tenure choice in China," ERES eres2015_44, European Real Estate Society (ERES).
    5. Dworsky, Amy & Gitlow, Elissa, 2017. "Employment outcomes of young parents who age out of foster care," Children and Youth Services Review, Elsevier, vol. 72(C), pages 133-140.
    6. Katharine G. Abraham & John Haltiwanger & Kristin Sandusky & James R. Spletzer, 2013. "Exploring Differences in Employment between Household and Establishment Data," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages 129-172.
    7. V. Joseph Hotz & John Karl Scholz, 2006. "Examining the Effect of the Earned Income Tax Credit on the Labor Market Participation of Families on Welfare," NBER Working Papers 11968, National Bureau of Economic Research, Inc.
    8. Carolyn J. Heinrich & Peter R. Mueser & Kenneth R. Troske, 2005. "Welfare to Temporary Work: Implications for Labor Market Outcomes," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 154-173, February.
    9. Stewart, C. Joy & Kum, Hye-Chung & Barth, Richard P. & Duncan, Dean F., 2014. "Former foster youth: Employment outcomes up to age 30," Children and Youth Services Review, Elsevier, vol. 36(C), pages 220-229.
    10. Bruce D. Meyer & James X. Sullivan, 2003. "Measuring the Well-Being of the Poor Using Income and Consumption," NBER Working Papers 9760, National Bureau of Economic Research, Inc.
    11. Carrington, William J. & Mueser, Peter R. & Troske, Kenneth, 2002. "The Impact of Welfare Reform on Leaver Characteristics, Employment and Recidivism," IZA Discussion Papers 561, Institute for the Study of Labor (IZA).
    12. repec:eee:cysrev:v:79:y:2017:i:c:p:547-557 is not listed on IDEAS
    13. Holzer, Harry J., 2007. "Collateral Costs: The Effects of Incarceration on the Employment and Earnings of Young Workers," IZA Discussion Papers 3118, Institute for the Study of Labor (IZA).
    14. Rebecca N. Warburton & William P. Warburton, 2004. "Canada Needs Better Data for Evidence-Based Policy: Inconsistencies Between Administrative and Survey Data on Welfare Dependence and Education," Canadian Public Policy, University of Toronto Press, vol. 30(3), pages 241-256, September.

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