Work

Life-Cycle Variation in the Association between Current and Lifetime Earnings

Year: 2006

Type: report

Abstract: Researchers in a variety of important economic literatures have assumed that current income variables as proxies for lifetime income variables follow the textbook errors-in-variables model.In an analysis of Social Security records containing nearly career-long earnings histories for the Health and Retirement Study sample, we find that the relationship between current and lifetime earnings departs substantially from the textbook model in ways that vary systematically over the life cycle.Our results can enable more appropriate analysis of and correction for errors-in-variables bias in a wide range of research that uses current earnings to proxy for lifetime earnings.

Source: National Bureau of Economic Research

DOI: 10.3386/w11943

Authors: Steven Haider, Gary Solon

Institutions: National Bureau of Economic Research, Western Michigan University, University of Toronto, Michigan State University, University of Michigan

Language: English

Topic: Labor market dynamics and wage inequality

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funder: National Institute on Aging

OpenAlex ID: W1973477639

Cites: 40

Cited by: 209

Related to: 10