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Trends in the transitory variance of male earnings methods and evidence

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TitleTrends in the transitory variance of male earnings methods and evidence
Publication TypeJournal Article
Year of Publication2012
AuthorsMoffitt, RA, Gottschalk, P
JournalJournal of Human Resources
Volume47
Pagination204-236
Date Published//
ISBN Number0022166X (ISSN)
Keywordserror analysis, estimation method, Income, modeling, Poverty and Welfare, trend analysis, United States
Abstract

We estimate the trend in the transitory variance of male earnings in the United States using the Michigan Panel Study of Income Dynamics from 1970 to 2004. Using an error components model and simpler but only ap- proximate methods, we find that the transitory variance started to increase in the early 1970s, continued to increase through the mid-1980s, and then remained at this new higher level through the 1990s and beyond. Thus the increase mostly occurred about 30 years ago. Its increase accounts for be- tween 31 and 49 percent of the total rise in cross-sectional variance, de- pending on the time period. © 2012 by the Board of Regents of the University of Wisconsin System.