On the Heterogeneity in Family Earnings and Income Dynamics in the PSID
By Iourii Manovski and Dmytro Hryshko
Published in the American Review
Abstract:
A large body of knowledge on income dynamics in the United States is based on data from the Panel Study of Income Dynamics (PSID). We find two sets of households in the PSID that differ dramatically in the dynamics of their income. Households headed by the sons of original PSID members have a highly persistent income process, whereas households headed by males who marry daughters of the original PSID members have a much less persistent income process. Using a variety of methods for identification of the persistence of income shocks, we show that these differences, albeit surprising, are highly robust.
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