Trouble in the Tails? What We Know About Earnings Nonresponse Thirty Years after Lillard, Smith, and Welch

68 Pages Posted: 20 Aug 2018

See all articles by Christopher R. Bollinger

Christopher R. Bollinger

University of Kentucky - Department of Economics

Barry T. Hirsch

Georgia State University; IZA Institute of Labor Economics

Charles Hokayem

U.S. Census Bureau

James P. Ziliak

University of Kentucky - Department of Economics

Abstract

Earnings nonresponse in household surveys is widespread, yet there is limited knowledge of how nonresponse biases earnings measures. We examine the consequences of nonresponse on earnings gaps and inequality using Current Population Survey individual records linked to administrative earnings data. The common assumption that earnings are missing at random is rejected. Nonresponse across the earnings distribution is U-shaped, highest in the left and right tails. Inequality measures differ between household and administrative data due in part to nonresponse. Nonresponse biases earnings differentials by race, gender, and education, particularly in the tails. Flexible copula-based models can account for nonrandom nonresponse.

Keywords: CPS ASEC, nonresponse bias, copula, measurement error, hot deck imputation, proxy reports, earnings inequality

JEL Classification: J31, C8, D31

Suggested Citation

Bollinger, Christopher R. and Hirsch, Barry T. and Hokayem, Charles and Ziliak, James P., Trouble in the Tails? What We Know About Earnings Nonresponse Thirty Years after Lillard, Smith, and Welch. IZA Discussion Paper No. 11710, Available at SSRN: https://ssrn.com/abstract=3234233

Christopher R. Bollinger (Contact Author)

University of Kentucky - Department of Economics ( email )

Lexington, KY 40506
United States

Barry T. Hirsch

Georgia State University ( email )

Department of Economics
Andrew Young School of Policy Studies
Atlanta, GA 30302-3992
United States
404-413-0880 (Phone)
404-413-0145 (Fax)

HOME PAGE: http://unionstats.gsu.edu/bhirsch

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Charles Hokayem

U.S. Census Bureau

James P. Ziliak

University of Kentucky - Department of Economics ( email )

Lexington, KY 40506
United States

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