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CROSS-SECTIONAL VARIATION IN INDIVIDUALS' EARNINGS INSTABILITY

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There has been considerable recent interest in earnings instability—the variability of workers' earnings around their expected earnings paths. While previous work has measured trends in instability, often to illuminate trends in inequality, this paper investigates the variation across workers. Data from the Panel Study of Income Dynamics reveal considerable differences in earnings instability across demographic and occupational characteristics, generally in accordance with prior expectations. These results can also be used to develop a person-specific measure of instability for use in behavioral studies, and it is shown that the resulting metric correlates strongly with several decisions that are plausibly influenced by earnings risk.
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Document Type: Research Article

Affiliations: University of Wisconsin–Milwaukee

Publication date: 01 June 2010

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