TY  - JOUR
AU  - Abowd,John M.
AU  - Card,David
TI  - On the Covariance Structure of Earnings and Hours Changes
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1832
PY  - 1986
Y2  - February 1986
UR  - http://www.nber.org/papers/w1832
L1  - http://www.nber.org/papers/w1832.pdf
N1  - Author contact info:
John M. Abowd
School of Industrial and Labor Relations
261 Ives Hall
Cornell University
Ithaca, NY 14853
Tel: 607/255-8024
Fax: 866/873-9078
E-Mail: John.Abowd@cornell.edu

David Card
Department of Economics
549 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA  94720-3880
Tel: 510/642-5222
Fax: 510/643-7042
E-Mail: card@econ.berkeley.edu
AB  - This paper presents an empirical analysis of changes in individual earnings and hours over time. Using longitudinal data from three panel surveys,we catalogue the main features of the covariance structure of changes in earnings and hours. We then present an interpretation of these features in terms of both a life-cycle labor supply model and a fixed-wage labor contract model. Our major findings are:(1) there is a remarkable similarity in the covariance structure of earnings and hours changes across the three surveys; and (2) apart from simple measurement error, the major component of variance in earnings and hours affects earnings and hours equi-proportionately.
ER  -