TY  - JOUR
AU  - Bound,John
AU  - Krueger,Alan B.
TI  - The Extent of Measurement Error In Longitudinal Earnings Data:  Do Two Wrongs Make A Right?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2885
PY  - 1989
Y2  - March 1989
UR  - http://www.nber.org/papers/w2885
L1  - http://www.nber.org/papers/w2885.pdf
N1  - Author contact info:
John Bound
Department of Economics
University of Michigan
Ann Arbor, MI 48109-1220
Tel: 734/998-7149
Fax: 734/998-7415
E-Mail: jbound@umich.edu

Alan B. Krueger
Industrial Relations Section
Firestone Library
Princeton University
Princeton, NJ 08544
Tel: 609/258-4046
Fax: 609/258-2907
E-Mail: akrueger@princeton.edu
AB  - This paper examines the properties and prevalence of measurement error in longitudinal earnings data. The analysis compares Current Population Survey data to administrative Social Security payroll tax records for a sample of heads of households over two years. In contrast. to the typically assumed properties of measurement error, the results indicate that errors are serially correlated over two years and negatively correlated with true earnings (i.e., mean reverting). Moreover, reported earnings are more reliable for females than males. Overall, the ratio of the variance of the signal to the total variance is .82 for men and .92 for women. These ratios fall to .65 and .81 when the data are specified in first-differences. The estimates suggest that longitudinal earnings data may be more reliable than previously believed.
ER  -