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Earnings Volatility In America: Evidence From Matched Cps, James P. Ziliak, Bradley Hardy, Christopher Bollinger

University of Kentucky Center for Poverty Research Discussion Paper Series

We offer new evidence on earnings volatility of men and women in the United States over the past four decades by using matched data from the March Current Population Survey. We construct a measure of total volatility that encompasses both permanent and transitory instability, and that admits employment transitions and losses from self employment. We also present a detailed decomposition of earnings volatility to account for changing shares in employment probabilities, conditional variances of continuous workers, and conditional mean variances from labor-force entry and exit. Our results show that earnings volatility among men increased by 15 percent from the early …