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Title: Consider the Source: Using Administrative Records to Estimate Returns to Earnings

Citation Type: Miscellaneous

Publication Year: 2017

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Abstract: In this paper, we explore how estimated returns to human capital characteristics in predicting earnings are affected by measurement error. We find that estimated returns to age and education may depend on the source data for earnings and that the impact of changing the source data may differ by race. Using standard analytical tools for measuring wage discrimination, we find that less of the racial wage gap is explained by worker characteristics when using a Current Population Survey (CPS) selfreported earnings measure rather than a measure of earnings from the Social Security Administration’s Detailed Earnings Record (DER). While other studies have examined issues of misreporting, specifically at the tail ends of the income distribution, our analysis extends beyond distributional changes to examine the impact of the source of earnings data on inequality measurement. Overall, our results provide informative and relevant information for understanding the extent to which self-reported earnings data and reported earnings from administrative records influences the estimation of inequality and our interpretation of factors that drive earnings inequality by race, specifically the black-white earnings gap.

Url: https://www.census.gov/content/dam/Census/newsroom/press-kits/2017/appam/appam_v5.pdf

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Authors: Gideon, Michael; Heggeness, Misty, L; Murray-Close, Marta; Myers, Samuel, L

Publisher: US Census Bureau

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure, Methodology and Data Collection

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