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

University of Kentucky Center for Poverty Research Discussion Paper Series

In this paper we offer new evidence on earnings and income volatility in the United States over the past four decades by using matched data from the March Current Population Survey. We find that between 1973 and 2008 family income volatility rose by 38 percent, primarily as a result of higher volatility of husbands earnings and non means-tested nonlabor income. Rising family income volatility is in evidence across race, education, and family structure, and after declining sharply while young, it is increasing in the latter part of the life cycle among the skilled. The Federal tax and transfer system dampens …