Earnings Measurement Error, Nonresponse and Administrative Mismatch in the CPS
July 2025
Working Paper Number:
CES-25-48
Abstract
Using the Current Population Survey Annual Social and Economic Supplement matched to Social Security Administration Detailed Earnings Records, we link observations across consecutive years to investigate a relationship between item nonresponse and measurement error in the earnings questions. Linking individuals across consecutive years allows us to observe switching from response to nonresponse and vice versa. We estimate OLS, IV, and finite mixture models that allow for various assumptions separately for men and women. We find that those who respond in both years of the survey exhibit less measurement error than those who respond in one year. Our findings suggest a trade-off between survey response and data quality that should be considered by survey designers, data collectors, and data users.
Document Tags and Keywords
Keywords
Keywords are automatically generated using KeyBERT, a powerful and innovative
keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant
keywords.
By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the
text, highlighting the most significant topics and trends. This approach not only enhances searchability but
provides connections that go beyond potentially domain-specific author-defined keywords.
:
estimation,
estimating,
data,
statistical,
survey data,
survey,
aggregate,
respondent,
estimator,
earnings,
minority,
average,
salary,
population,
census bureau,
ssa,
sampling,
sample,
earner,
survey income,
2010 census,
population survey,
census disclosure
Tags
Tags are automatically generated using a pretrained language model from spaCy, which excels at
several tasks, including entity tagging.
The model is able to label words and phrases by part-of-speech,
including "organizations." By filtering for frequent words and phrases labeled as "organizations", papers are
identified to contain references to specific institutions, datasets, and other organizations.
:
Social Security Administration,
National Science Foundation,
Ordinary Least Squares,
Current Population Survey,
Survey of Income and Program Participation,
Social Security,
Detailed Earnings Records,
Federal Insurance Contribution Act,
Protected Identification Key,
Social and Economic Supplement,
ASEC,
CPS ASEC
Similar Working Papers
Similarity between working papers are determined by an unsupervised neural
network model
know as Doc2Vec.
Doc2Vec is a model that represents entire documents as fixed-length vectors, allowing for the
capture of semantic meaning in a way that relates to the context of words within the document. The model learns to
associate a unique vector with each document while simultaneously learning word vectors, enabling tasks such as
document classification, clustering, and similarity detection by preserving the order and structure of words. The
document vectors are compared using cosine similarity/distance to determine the most similar working papers.
Papers identified with 🔥 are in the top 20% of similarity.
The 10 most similar working papers to the working paper 'Earnings Measurement Error, Nonresponse and Administrative Mismatch in the CPS' are listed below in order of similarity.
-
Working PaperTrends in Earnings Volatility using Linked Administrative and Survey Data🔥
August 2020
Working Paper Number:
CES-20-24
We document trends in earnings volatility separately by gender in combination with other characteristics such as race, educational attainment, and employment status using unique linked survey and administrative data for the tax years spanning 1995-2015. We also decompose the variance of trend volatility into within- and between-group contributions, as well as transitory and permanent shocks. Our results for continuously working men suggest that trend earnings volatility was stable over our period in both survey and tax data, though with a substantial countercyclical business-cycle component. Trend earnings volatility among women declined over the period in both survey and administrative data, but unlike for men, there was no change over the Great Recession. The variance decompositions indicate that nonresponders, low-educated, racial minorities, and part-year workers have the greatest group specific earnings volatility, but with the exception of part-year workers, they contribute least to the level and trend of volatility owing to their small share of the population. There is evidence of stable transitory volatility, but rising permanent volatility over the past two decades in male and female earnings.View Full Paper PDF
-
Working PaperResponse Error & the Medicaid undercount in the CPS
December 2016
Working Paper Number:
carra-2016-11
The Current Population Survey Annual Social and Economic Supplement (CPS ASEC) is an important source for estimates of the uninsured population. Previous research has shown that survey estimates produce an undercount of beneficiaries compared to Medicaid enrollment records. We extend past work by examining the Medicaid undercount in the 2007-2011 CPS ASEC compared to enrollment data from the Medicaid Statistical Information System for calendar years 2006-2010. By linking individuals across datasets, we analyze two types of response error regarding Medicaid enrollment - false negative error and false positive error. We use regression analysis to identify factors associated with these two types of response error in the 2011 CPS ASEC. We find that the Medicaid undercount was between 22 and 31 percent from 2007 to 2011. In 2011, the false negative rate was 40 percent, and 27 percent of Medicaid reports in CPS ASEC were false positives. False negative error is associated with the duration of enrollment in Medicaid, enrollment in Medicare and private insurance, and Medicaid enrollment in the survey year. False positive error is associated with enrollment in Medicare and shared Medicaid coverage in the household. We discuss implications for survey reports of health insurance coverage and for estimating the uninsured population.View Full Paper PDF
-
Working PaperUsing Linked Survey and Administrative Data to Better Measure Income: Implications for Poverty, Program Effectiveness and Holes in the Safety Net
October 2015
Working Paper Number:
CES-15-35
We examine the consequences of underreporting of transfer programs in household survey data for several prototypical analyses of low-income populations. We focus on the Current Population Survey (CPS), the source of official poverty and inequality statistics, but provide evidence that our qualitative conclusions are likely to apply to other surveys. We link administrative data for food stamps, TANF, General Assistance, and subsidized housing from New York State to the CPS at the individual level. Program receipt in the CPS is missed for over one-third of housing assistance recipients, 40 percent of food stamp recipients and 60 percent of TANF and General Assistance recipients. Dollars of benefits are also undercounted for reporting recipients, particularly for TANF, General Assistance and housing assistance. We find that the survey data sharply understate the income of poor households, as conjectured in past work by one of the authors. Underreporting in the survey data also greatly understates the effects of anti-poverty programs and changes our understanding of program targeting, often making it seem that welfare programs are less targeted to both the very poorest and middle income households than they are. Using the combined data rather than survey data alone, the poverty reducing effect of all programs together is nearly doubled while the effect of housing assistance is tripled. We also re-examine the coverage of the safety net, specifically the share of people without work or program receipt. Using the administrative measures of program receipt rather than the survey ones often reduces the share of single mothers falling through the safety net by one-half or more.View Full Paper PDF
-
Working PaperInterpreting Cohort Profiles of Lifecycle Earnings Volatility
April 2024
Working Paper Number:
CES-24-21
We present new estimates of earnings volatility over time and the lifecycle for men and women by race and human capital. Using a long panel of restricted-access administrative Social Security earnings linked to the Current Population Survey, we estimate volatility with both transparent summary measures, as well as decompositions into permanent and transitory components. From the late 1970s to the mid 1990s there is a strong negative trend in earnings volatility for both men and women. We show this is driven by a reduction in transitory variance. Starting in the mid 1990s there is relative stability in trends of male earnings volatility because of an increase in the variance of permanent shocks, especially among workers without a college education, and a more attenuated trend decline among women. Cohort analyses indicate a strong U-shape pattern of volatility over the working life, which comes from large permanent shocks early and later in the lifecycle. However, this U-shape shifted downward and leftward in more recent cohorts, the latter from the fanning out of lifecycle transitory volatility in younger cohorts. These patterns are more pronounced among White men and women compared to Black workers.View Full Paper PDF
-
Working PaperThe Antipoverty Impact of the EITC: New Estimates from Survey and Administrative Tax Records
April 2019
Working Paper Number:
CES-19-14R
We reassess the antipoverty effects of the EITC using unique data linking the CPS Annual Social and Economic Supplement to IRS data for the same individuals spanning years 2005-2016. We compare EITC benefits from standard simulators to administrative EITC payments and find that significantly more actual EITC payments flow to childless tax units than predicted, and to those whose family income places them above official poverty thresholds. However, actual EITC payments appear to be target efficient at the tax unit level. In 2016, about 3.1 million persons were lifted out of poverty by the EITC, substantially less than prior estimates.View Full Paper PDF
-
Working PaperInvestigating the Use of Administrative Records in the Consumer Expenditure Survey
March 2018
Working Paper Number:
carra-2018-01
In this paper, we investigate the potential of applying administrative records income data to the Consumer Expenditure (CE) survey to inform measurement error properties of CE estimates, supplement respondent-collected data, and estimate the representativeness of the CE survey by income level. We match individual responses to Consumer Expenditure Quarterly Interview Survey data collected from July 2013 through December 2014 to IRS administrative data in order to analyze CE questions on wages, social security payroll deductions, self-employment income receipt and retirement income. We find that while wage amounts are largely in alignment between the CE and administrative records in the middle of the wage distribution, there is evidence that wages are over-reported to the CE at the bottom of the wage distribution and under-reported at the top of the wage distribution. We find mixed evidence for alignment between the CE and administrative records on questions covering payroll deductions and self-employment income receipt, but find substantial divergence between CE responses and administrative records when examining retirement income. In addition to the analysis using person-based linkages, we also match responding and non-responding CE sample units to the universe of IRS 1040 tax returns by address to examine non-response bias. We find that non-responding households are substantially richer than responding households, and that very high income households are less likely to respond to the CE.View Full Paper PDF
-
Working PaperMeasuring Income of the Aged in Household Surveys: Evidence from Linked Administrative Records
June 2024
Working Paper Number:
CES-24-32
Research has shown that household survey estimates of retirement income (defined benefit pensions and defined contribution account withdrawals) suffer from substantial underreporting which biases downward measures of financial well-being among the aged. Using data from both the redesigned 2016 Current Population Survey Annual Social and Economic Supplement (CPS ASEC) and the Health and Retirement Study (HRS), each matched with administrative records, we examine to what extent underreporting of retirement income affects key statistics such as reliance on Social Security benefits and poverty among the aged. We find that underreporting of retirement income is still prevalent in the CPS ASEC. While the HRS does a better job than the CPS ASEC in terms of capturing retirement income, it still falls considerably short compared to administrative records. Consequently, the relative importance of Social Security income remains overstated in household surveys'53 percent of elderly beneficiaries in the CPS ASEC and 49 percent in the HRS rely on Social Security for the majority of their incomes compared to 42 percent in the linked administrative data. The poverty rate for those aged 65 and over is also overstated'8.8 percent in the CPS ASEC and 7.4 percent in the HRS compared to 6.4 percent in the linked administrative data. Our results illustrate the effects of using alternative data sources in producing key statistics from the Social Security Administration's Income of the Aged publication.View Full Paper PDF
-
Working PaperEstimating Measurement Error in SIPP Annual Job Earnings: A Comparison of Census Bureau Survey and SSA Administrative Data
July 2011
Working Paper Number:
CES-11-20
We quantify sources of variation in annual job earnings data collected by the Survey of Income and Program Participation (SIPP) to determine how much of the variation is the result of measurement error. Jobs reported in the SIPP are linked to jobs reported in an administrative database, the Detailed Earnings Records (DER) drawn from the Social Security Administration's Master Earnings File, a universe file of all earnings reported on W-2 tax forms. As a result of the match, each job potentially has two earnings observations per year: survey and administrative. Unlike previous validation studies, both of these earnings measures are viewed as noisy measures of some underlying true amount of annual earnings. While the existence of survey error resulting from respondent mistakes or misinterpretation is widely accepted, the idea that administrative data are also error-prone is new. Possible sources of employer reporting error, employee under-reporting of compensation such as tips, and general differences between how earnings may be reported on tax forms and in surveys, necessitates the discarding of the assumption that administrative data are a true measure of the quantity that the survey was designed to collect. In addition, errors in matching SIPP and DER jobs, a necessary task in any use of administrative data, also contribute to measurement error in both earnings variables. We begin by comparing SIPP and DER earnings for different demographic and education groups of SIPP respondents. We also calculate different measures of changes in earnings for individuals switching jobs. We estimate a standard earnings equation model using SIPP and DER earnings and compare the resulting coefficients. Finally exploiting the presence of individuals with multiple jobs and shared employers over time, we estimate an econometric model that includes random person and firm effects, a common error component shared by SIPP and DER earnings, and two independent error components that represent the variation unique to each earnings measure. We compare the variance components from this model and consider how the DER and SIPP differ across unobservable components.View Full Paper PDF
-
Working PaperEarnings Mobility in the US: A New Look at Intergenerational Inequality
May 2002
Working Paper Number:
CES-02-11
This study uses a new data set that contains the Social Security earnings histories of parents and children in the 1984 Survey of Income and Program Participation, to measure the intergenerational elasticity in earnings in the United States. Earlier studies that found an intergenerational elasticity of 0.4 have typically used only up to five-year averages of fathers' earnings to measure fathers' permanent earnings. However, dynamic earnings models that allow for serial correlation in transitory shocks to earnings imply that using such a short time span may lead to estimates that are biased down by nearly 30 percent. Indeed, by using many more years of fathers' earnings than earlier studies, the intergenerational elasticity between fathers and sons is estimated to be around 0.6 implying significantly less mobility in the U.S. than previous research indicated. The elasticity in earnings between fathers and daughters is of a similar magnitude. The evidence also suggests that family income has an even larger effect than fathers' earnings on children's future labor market success. The elasticity of earnings is higher for families with low net worth, offering some empirical support for theoretical models that predict differences due to borrowing constraints. Some evidence of a higher elasticity among blacks is found but the results are not conclusive.View Full Paper PDF
-
Working PaperOccupation Inflation in the Current Population Survey
September 2012
Working Paper Number:
CES-12-26
A common caveat often accompanying results relying on household surveys regards respondent error. There is research using independent, presumably error-free administrative data, to estimate the extent of error in the data, the correlates of error, and potential corrections for the error. We investigate measurement error in occupation in the Current Population Survey (CPS) using the panel component of the CPS to identify those that incorrectly report changing occupation. We find evidence that individuals are inflating their occupation to higher skilled and higher paying occupations than the ones they actually perform. Occupation inflation biases the education and race coefficients in standard Mincer equation results within occupations.View Full Paper PDF
