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/lp/university-of-wisconsin-press/changes-in-the-distribution-of-earnings-volatility-GSjFRZctfO
- Publisher
- University of Wisconsin Press
- Copyright
- ©by the Board of Regents of the University of Wisconsin System
- ISSN
- 1548-8004
Abstract
<p>Recent research has documented a rise in the volatility of individual labor earnings in the United States since 1970. Existing measures of this trend abstract from within-group latent heterogeneity, effectively estimating an increase in average volatility for observable groups. We decompose this average and find no systematic rise in volatility for the vast majority of individuals. Increasing average volatility has been driven almost entirely by rising earnings volatility of those with the most volatile earnings, identified ex ante by large past earnings changes. We characterize dynamics of the volatility distribution with a nonparametric Bayesian stochastic volatility model from Jensen and Shore (2011).</p>
Journal
Journal of Human Resources – University of Wisconsin Press
Published: Aug 9, 2015