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Cited by 744Labor market dynamics and wage inequalityFinancial Literacy, Pension, Retirement AnalysisRetirement, Disability, and Employment

Life-Cycle Variation in the Association between Current and Lifetime Earnings

Haider, Steven, Solon, Gary·2006·American Economic Review
DOI 10.1257/aer.96.4.1308
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Abstract

Researchers in a variety of important economic literatures have assumed that current income variables as proxies for lifetime income variables follow the textbook errors-in-variables model. In our analysis of Social Security records containing nearly career-long earnings histories for the Health and Retirement Study sample, we find that the relationship between current and lifetime earnings departs substantially from the textbook model in ways that vary systematically over the life cycle. Our results can enable more appropriate analysis of, and correction for, errors-in-variables bias in any research that uses current earnings to proxy for lifetime earnings.

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Crossref · 10.1257/aer.96.4.1308

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  • Earnings levels at age 28 are highly correlated with earnings at later ages.

    “Although individuals' earnings trajectories remain quite steep at age 28, earnings levels at age 28 are highly correlated with earnings at later ages (Haider and Solon 2006), a finding we confirm within the tax data in online Appendix Figure 4.”

    From Measuring the Impacts of Teachers II: Teacher Value-Added and Student Outcomes in Adulthood (2014) · cites this paper as Haider and Solon 2006

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Authors
Haider, S., & Solon, G.
Affiliations
  • Michigan State University (US)
  • University of Michigan (US)
Venue
American Economic Review
Publisher
American Economic Association
Published
2006-09-01
Volume
96
Issue
4
Pages
1308-1320
ISSN
0002-8282 (ISSN-L)
DOI
10.1257/aer.96.4.1308
OpenAlex
W3122812335
Cited by
744
References
0
Citations by year
2026: 27 · 2025: 31 · 2024: 33 · 2023: 41 · 2022: 40 · 2021: 39 · 2020: 48 · 2019: 56 · 2018: 31 · 2017: 37 · 2016: 46 · 2015: 39 · 2014: 39 · 2013: 43 · 2012: 30
FWCI
71.42
Type
journal article
Language
en
Open access
closed
Locations
  • American Economic Review (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Labor market dynamics and wage inequality
  • Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
  • Social Sciences › Demography › Retirement, Disability, and Employment
Keywords
errors-in-variables bias, current earnings, lifetime earnings, life-cycle earnings, earnings measurement, Health and Retirement Study, measurement error

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