On the Covariance Structure of Earnings and Hours Changes
This paper presents an empirical analysis of individual earnings and hours data from three different longitudinal surveys. In the first part of the paper we catalog the main features of the covariance structure of earnings and hours changes. We find that this structure is very similar across data se...
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| Veröffentlicht in: | Econometrica 1989-03, Vol.57 (2), p.411-445 |
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| container_title | Econometrica |
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| creator | Abowd, John M. Card, David |
| description | This paper presents an empirical analysis of individual earnings and hours data from three different longitudinal surveys. In the first part of the paper we catalog the main features of the covariance structure of earnings and hours changes. We find that this structure is very similar across data sets, and may be adequately summarized by a simple components-of-variance model, consisting of (i) serially uncorrelated measurement error, (ii) a shared component of earnings and hours with a second-order moving average covariance structure, and (iii) a nonstationary component that affects only the variances and contemporaneous covariances of earnings and hours. In the second part of the paper we offer an interpretation of this model in terms of a simple life-cycle labor supply model. On the assumption that we can identify individualproductivity growth with the shared component of earnings and hours variation, we obtain estimates of the intertemporal substitution elasticity. The results are not favorable to the life-cycle model: most of the covariation of earnings and hours occurs at fixed hourly wage rates. |
| doi_str_mv | 10.2307/1912561 |
| format | Article |
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In the first part of the paper we catalog the main features of the covariance structure of earnings and hours changes. We find that this structure is very similar across data sets, and may be adequately summarized by a simple components-of-variance model, consisting of (i) serially uncorrelated measurement error, (ii) a shared component of earnings and hours with a second-order moving average covariance structure, and (iii) a nonstationary component that affects only the variances and contemporaneous covariances of earnings and hours. In the second part of the paper we offer an interpretation of this model in terms of a simple life-cycle labor supply model. On the assumption that we can identify individualproductivity growth with the shared component of earnings and hours variation, we obtain estimates of the intertemporal substitution elasticity. The results are not favorable to the life-cycle model: most of the covariation of earnings and hours occurs at fixed hourly wage rates.</description><identifier>ISSN: 0012-9682</identifier><identifier>EISSN: 1468-0262</identifier><identifier>DOI: 10.2307/1912561</identifier><identifier>CODEN: ECMTA7</identifier><language>eng</language><publisher>Malden, MA: The Econometric Society</publisher><subject>Applications ; Coefficients ; Covariance ; Covariance matrices ; Degrees of freedom ; Earnings ; Econometrics ; Economic models ; Exact sciences and technology ; Hours of work ; Households ; Labor supply ; Longitudinal studies ; Mathematics ; Probability and statistics ; Productivity ; Sciences and techniques of general use ; Standard error ; Statistical discrepancies ; Statistics ; Survey sampling ; Wage rate ; Wage rates ; Wages & salaries ; Working hours</subject><ispartof>Econometrica, 1989-03, Vol.57 (2), p.411-445</ispartof><rights>Copyright 1989 The Econometric Society</rights><rights>1990 INIST-CNRS</rights><rights>Copyright Econometric Society Mar 1989</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c421t-228f4673cd55cd053d0907d518938352f6ed2d962d685fc5e817d8adc73ca4eb3</citedby></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/1912561$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/1912561$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>314,776,780,799,828,27846,27901,27902,57992,57996,58225,58229</link.rule.ids><backlink>$$Uhttp://pascal-francis.inist.fr/vibad/index.php?action=getRecordDetail&idt=6760316$$DView record in Pascal Francis$$Hfree_for_read</backlink></links><search><creatorcontrib>Abowd, John M.</creatorcontrib><creatorcontrib>Card, David</creatorcontrib><title>On the Covariance Structure of Earnings and Hours Changes</title><title>Econometrica</title><description>This paper presents an empirical analysis of individual earnings and hours data from three different longitudinal surveys. In the first part of the paper we catalog the main features of the covariance structure of earnings and hours changes. We find that this structure is very similar across data sets, and may be adequately summarized by a simple components-of-variance model, consisting of (i) serially uncorrelated measurement error, (ii) a shared component of earnings and hours with a second-order moving average covariance structure, and (iii) a nonstationary component that affects only the variances and contemporaneous covariances of earnings and hours. In the second part of the paper we offer an interpretation of this model in terms of a simple life-cycle labor supply model. On the assumption that we can identify individualproductivity growth with the shared component of earnings and hours variation, we obtain estimates of the intertemporal substitution elasticity. The results are not favorable to the life-cycle model: most of the covariation of earnings and hours occurs at fixed hourly wage rates.</description><subject>Applications</subject><subject>Coefficients</subject><subject>Covariance</subject><subject>Covariance matrices</subject><subject>Degrees of freedom</subject><subject>Earnings</subject><subject>Econometrics</subject><subject>Economic models</subject><subject>Exact sciences and technology</subject><subject>Hours of work</subject><subject>Households</subject><subject>Labor supply</subject><subject>Longitudinal studies</subject><subject>Mathematics</subject><subject>Probability and statistics</subject><subject>Productivity</subject><subject>Sciences and techniques of general use</subject><subject>Standard error</subject><subject>Statistical discrepancies</subject><subject>Statistics</subject><subject>Survey sampling</subject><subject>Wage rate</subject><subject>Wage rates</subject><subject>Wages & salaries</subject><subject>Working hours</subject><issn>0012-9682</issn><issn>1468-0262</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1989</creationdate><recordtype>article</recordtype><sourceid>K30</sourceid><sourceid>BENPR</sourceid><recordid>eNp90d9LwzAQB_AgCs4p_gtBRZ-ql59NHqVMJwz2oD6XmKRbR9fOpBX8783YUBAUDvLyyfeOO4TOCdxSBvkd0YQKSQ7QiHCpMqCSHqIRAKGZlooeo5MYVwAgUo2Qnre4X3pcdB8m1Ka1Hj_3YbD9EDzuKjwxoa3bRcSmdXjaDSHiYmnahY-n6KgyTfRn-3eMXh8mL8U0m80fn4r7WWY5JX1Gqaq4zJl1QlgHgjnQkDtBlGaKCVpJ76jTkjqpRGWFVyR3yjibvhju39gYXe9yN6F7H3zsy3UdrW8a0_puiCWTGiQVJMGLX3CV5m3TbCUlXEmtGfyLgCmtpeYJXf6FCNWSc5bDtt_NTtnQxRh8VW5CvTbhsyRQbk9R7k-R5NU-z0RrmiqkPdfxm8tcAiPyh61i34U_074AG_qOUg</recordid><startdate>19890301</startdate><enddate>19890301</enddate><creator>Abowd, John M.</creator><creator>Card, David</creator><general>The Econometric Society</general><general>Blackwell</general><general>George Banta Pub. 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In the first part of the paper we catalog the main features of the covariance structure of earnings and hours changes. We find that this structure is very similar across data sets, and may be adequately summarized by a simple components-of-variance model, consisting of (i) serially uncorrelated measurement error, (ii) a shared component of earnings and hours with a second-order moving average covariance structure, and (iii) a nonstationary component that affects only the variances and contemporaneous covariances of earnings and hours. In the second part of the paper we offer an interpretation of this model in terms of a simple life-cycle labor supply model. On the assumption that we can identify individualproductivity growth with the shared component of earnings and hours variation, we obtain estimates of the intertemporal substitution elasticity. The results are not favorable to the life-cycle model: most of the covariation of earnings and hours occurs at fixed hourly wage rates.</abstract><cop>Malden, MA</cop><pub>The Econometric Society</pub><doi>10.2307/1912561</doi><tpages>35</tpages><oa>free_for_read</oa></addata></record> |
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| ispartof | Econometrica, 1989-03, Vol.57 (2), p.411-445 |
| issn | 0012-9682 1468-0262 |
| language | eng |
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| source | Jstor Complete Legacy; Periodicals Index Online; JSTOR Mathematics & Statistics |
| subjects | Applications Coefficients Covariance Covariance matrices Degrees of freedom Earnings Econometrics Economic models Exact sciences and technology Hours of work Households Labor supply Longitudinal studies Mathematics Probability and statistics Productivity Sciences and techniques of general use Standard error Statistical discrepancies Statistics Survey sampling Wage rate Wage rates Wages & salaries Working hours |
| title | On the Covariance Structure of Earnings and Hours Changes |
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