Measurement error in longitudinal earnings data: evidence from Germany

Achim Schmillen, Matthias Umkehrer and Till von Wachter
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Matthias Umkehrer: Institute for Employment Research (IAB), Nuremberg, Germany
Till von Wachter: University of California, Los Angeles; National Bureau of Economic Research, Cambridge, USA; Centre for Economic Policy Research, London; IZA - Institute of Labor Economics, Bonn

Journal for Labour Market Research, 2024, vol. 58, Article 8

Abstract: "We present evidence on the extent of measurement error in German longitudinal earnings data. Qualitatively, we confirm the main result of the international literature: longitudinal earnings data are relatively reliable in a cross section but much less so in first differences. Quantitatively, in the cross section our fndings are very similar to those of Bound and Krueger (J Labor Econ 9:1–24, 1991) and Pischke (J Bus Econ Stat 13:305–314, 1995) for the United States while we find even stronger evidence that frst-differencing exacerbates measurement error problems. We also show that measurement error in our survey data is not“classical” as it is negatively correlated with administrative earnings and positively autocorrelated over an extended period of time. Additionally, we estimate a model of measurement error stemming from underreporting of transitory earnings shocks in combination with a white-noise component and make a number of methodological contributions. Our results are robust to the use of two different linked Survey administrative data sets and various other sensitivity checks." (Author's abstract, IAB-Doku, © Springer) ((en))

Keywords: Bundesrepublik Deutschland; IAB-Open-Access-Publikation; Befragung; IAB-Weiterbildungspanel; Datenqualität; Messfehler; Einkommensentwicklung; Haushaltseinkommen; Längsschnittuntersuchung; Panel; Antwortverhalten; private Haushalte; Reliabilität; PASS-ADIAB; 2006-2010 (search for similar items in EconPapers)
JEL-codes: C18 C33 J30 (search for similar items in EconPapers)
Date: 2024-06-04
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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DOI: 10.1186/s12651-024-00366-x

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