Measurement Error in Earnings Data in the Health and Retirement Study

43 Pages Posted: 9 Nov 2008

See all articles by Jessie Bricker

Jessie Bricker

Syracuse University - Department of Economics

Gary V. Engelhardt

Syracuse University - Center for Policy Research; Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 2007

Abstract

We provide new evidence on the extent of measurement error in respondent-reported earnings data by exploiting detailed W-2 records matched to older workers in the Health and Retirement Study (HRS). Our empirical findings are qualitatively consistent with the findings of previous studies. Mean measurement error in the 1991 HRS earnings data for men is somewhat larger than what has been found in other validation studies, but is still modest, averaging about 0.059 log points, approximately 5.9 percent, or $1,500. For women in 1991, it is 0.067 log points, approximately 6.7 percent, or $916. We find a negative correlation between the measurement error and the true value of earnings as measured by the W-2 records, which indicates the presence of non-classical measurement error. For men and women, this error shows little correlation with a standard set of cross-sectional earnings determinants. The one exception is that the measurement error rises with reported education. The bias on the OLS parameter estimate of the impact of having a college degree or higher (relative to a high school drop-out) from using the respondent-reported rather than the W-2 earnings is positive and estimated to be 0.071 log points, or roughly a bias of 7 percent.

Suggested Citation

Bricker, Jessie and Engelhardt, Gary V., Measurement Error in Earnings Data in the Health and Retirement Study (October 2007). Available at SSRN: https://ssrn.com/abstract=1297452 or http://dx.doi.org/10.2139/ssrn.1297452

Jessie Bricker (Contact Author)

Syracuse University - Department of Economics ( email )

Syracuse, NY 13244-1020
United States

Gary V. Engelhardt

Syracuse University - Center for Policy Research ( email )

426 Eggers Hall
Syracuse, NY 13244
United States
315-443-4598 (Phone)
315-443-1081 (Fax)

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
17
Abstract Views
430
PlumX Metrics