The Good, The Bad and the Ugly: Measurement Error, Nonresponse and Administrative Mismatch in the CPS

Sandwiches from 12:15, Seminar at 12:30

Using the March Current Population Survey Annual Social and Economic Survey matched to the Social Security Administration Detailed Earnings Records, we link observations across year to investigate a relationship between item non-response and measurement error for the CPS earnings questions. Prior research has found that (1) non-response is linked to earnings: individuals in the tails of the earnings distribution are less likely to respond to the earnings question. Other research has suggested that (2) individuals with income above the average are more likely to under-report their earnings, while individuals with earnings below average are more likely to over-report their earnings. We examine whether these two phenomenon are related. The overlapping samples in the CPS data allow us to observe individuals who switch from response to non-response. This allows us to investigate whether those who fail to respond in both years have different response patterns than those who provide earnings data in both years.