Measurement Error in Cross-Sectional and Longitudinal Labor Market Surveys: Results from Two Validation Studies

61 Pages Posted: 16 Jun 2004 Last revised: 21 May 2022

See all articles by John Bound

John Bound

University of Michigan; National Bureau of Economic Research (NBER)

Charles Brown

University of Michigan; National Bureau of Economic Research (NBER)

Greg J. Duncan

Northwestern University - Institute for Policy Research; National Bureau of Economic Research (NBER)

Willard L. Rodgers

University of Michigan at Ann Arbor - Institute for Social Research (ISR)

Date Written: March 1989

Abstract

This paper reports evidence on the error properties of survey reports of labor market variables such as earnings and work hours. Our primary data source is the PSID Validation Study, a two-wave panel survey of a sample of workers employed by a large firm which also allowed us access to its very detailed records of its workers earnings. etc. The second data source uses individuals' 1977 and 1978 (March Current Population Survey) reports of earnings, matched to Social Security earnings records. In both data sets, individuals: reports of earnings are fairly accurately reported, and the errors are negatively related to true earnings. The latter property reduces the bias due to measurement error when earnings are used as an independent variable, but (unlike the classical-error case) leads to some bias when earnings are the dependent variable. Measurement-error-induced biases when change in earnings is the variable of interest are larger, but not dramatically so. Various measures of hourly earnings were much less reliable than annual earnings. Retrospective reports of unemployment showed considerable under-reporting, even of long spells.

Suggested Citation

Bound, John and Brown, Charles C. and Duncan, Greg J. and Rodgers, Willard L., Measurement Error in Cross-Sectional and Longitudinal Labor Market Surveys: Results from Two Validation Studies (March 1989). NBER Working Paper No. w2884, Available at SSRN: https://ssrn.com/abstract=227236

John Bound (Contact Author)

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Charles C. Brown

University of Michigan ( email )

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Greg J. Duncan

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Willard L. Rodgers

University of Michigan at Ann Arbor - Institute for Social Research (ISR) ( email )

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