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Measurement and Cross-Country Differences

Earnings for topcoded fathers are imputed using march

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Unformatted text preview: uted using March CPS data for 1970 to 1980 and using 1984 SIPP for 1981 to 1985. Standard errors are adjusted for within family correlation when more than one sibling is present. *Required years of positive earnings are: 1 for 2-year averages; 2 for 4-year averages; 3 for 7-year averages; 7 for 10-year averages; and 11 for 16-year averages. this analysis. In the top panel of the table, fathers’ earnings must be positive in each year. In the lower panel, some years of zero earnings are allowed. Within each panel, there are three additional selection rules: noncovered fathers are dropped; noncovered fathers’ earnings are imputed; and government and self-employed fathers and noncovered fathers are dropped. In the first set of results in the top panel (row 1 of table 4), it is not necessary to actually identify covered status, because all fathers with years of zero earnings are dropped. Therefore, it is possible to construct averages that include years prior to 1979. Under the second rule (estimates in row 2), in contrast, averages can only be constructed going back to 1979, because it is difficult to identify covered status in prior years. Under the third rule (row 3), those identified as government or self-employed workers at any time during the 1984 SIPP survey period are dropped. The results from using the two-year average with SER data are clearly lower than what was found using the SIPP. The highest coefficient is 0.289 when noncovered fathers are dropped from the analysis. The fact that many fathers have noncovered earnings (in addition to covered earnings) that are not captured in the SER data is the obvious explanation for the greater attenuation using the SER data. In fact, when noncovered fathers are dropped and earnings are required to be at least $3,000 in each year, thereby eliminating many of those whose covered earnings severely misrepresent their true earnings, the estimated coefficient rises to 0.334 (not shown), which is comparable to the SIPP results from table 3. This suggests that...
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