NBER Publications by Philip Armour

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Working Papers and Chapters

March 2016Trends in Pension Cash-out at Job Change and the Effects on Long-term Outcomes
with Michael D. Hurd, Susann Rohwedder
in Insights in the Economics of Aging, David A. Wise, editor
Might the financial security of working Americans during retirement be jeopardized by their ability to cash out their pension plans when they leave a job? Federal tax rules discourage such actions, but limited evidence suggests the practice is common. This paper uses long-term longitudinal data in the Health and Retirement Study to update prior findings, investigate cohort differences and study the long-term consequences of pension cash-out at job separation. We find pension cash-out is more concentrated among workers who experience economic or health shocks around the time of job separation. The most recent cohort of older workers more often cashed out pension balances and more frequently used the balances for spending or to pay off debt. This is likely due to job separations during or ...
January 2014Using the Pareto Distribution to Improve Estimates of Topcoded Earnings
with Richard V. Burkhauser, Jeff Larrimore: w19846
Inconsistent censoring in the public-use March CPS limits its usefulness in measuring labor earnings trends, as previous approaches for imputing topcoded earnings systematically understate top earnings. Using Pareto estimation methods with less-censored internal data, we create an enhanced cell-mean series to capture top earnings in the public-use data. Annual earnings inequality trends since 1963 using our series largely mirror those found by Kopczuk, Saez, and Song (2010) using Social Security Administration data for Commerce and Industry workers. When we extend our analysis to 2013 and consider all workers, earnings inequality levels are higher but its growth is more modest.
December 2013Accounting for Income Changes over the Great Recession (2007-2010) Relative to Previous Recessions: The Importance of Taxes and Transfers
with Jeff Larrimore, Richard V. Burkhauser: w19699
With data from the March CPS and using shift-share analysis, we analyze the factors that account for changes in post-tax post-transfer income during each of the past four recessions. What distinguishes the Great Recession is that drops in employment rather than wage earnings drove income declines. In addition, taxes and transfers played a much greater role in offsetting market income losses --a result largely missed in analyses that do not account for taxes and transfers. This is particularly so among the bottom quintile of the distribution where lower and increased transfers offset more than one-half of the market income declines.
June 2013Levels and Trends in United States Income and Its Distribution A Crosswalk from Market Income Towards a Comprehensive Haig-Simons Income Approach
with Richard V. Burkhauser, Jeff Larrimore: w19110
Recent research on United States levels and trends in income inequality vary substantially in how they measure income. Piketty and Saez (2003) examine market income of tax units based on IRS tax return data, DeNavas-Walt, Proctor, and Smith (2012) and most CPS-based research uses pre-tax, post-transfer cash income of households, while the CBO (2012) uses both data sets and focuses on household size-adjusted comprehensive income of persons, including taxable realized capital gains. This paper provides a crosswalk of income growth across these common income measures using a unified data set. It then uses a more consistent Haig-Simons income definition approach to comprehensive income by incorporating yearly-accrued capital gains to measure yearly changes in wealth rather than focusing solely...

Published: Levels and Trends in U.S. Income and its Distribution: A Crosswalk from Market Income towards a Comprehensive Haig-Simons Income Approach Philip Armour1, Richard V. Burkhauser2,* andJeff Larrimore3 Southern Economic Journal Volume 81, Issue 2, pages 271–293, October 2014

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