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Projecting Longitudinal Earnings Patterns for Long-Run Policy Analysis: Technical Paper 2003-02

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  • Amy Rehder Harris
  • John Sabelhaus

Abstract

This paper presents a method for projecting person-level labor force participation and earnings for the U.S. population in a dynamic micro-simulation setting. A dynamic micro-simulation model starts with economic and demographic data for a current sample of the population, then stochastically "ages" that sample forward through time, ultimately generating a longitudinal micro data file, which is useful for studying Social Security and other long-term issues. The stochastic projections described here proceed in four steps: in each year, every person is sequentially

Suggested Citation

  • Amy Rehder Harris & John Sabelhaus, 2003. "Projecting Longitudinal Earnings Patterns for Long-Run Policy Analysis: Technical Paper 2003-02," Working Papers 14364, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:14364
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    File URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-2_0.pdf
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    References listed on IDEAS

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    1. Christopher D. Carroll, 1997. "Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 1-55.
    2. Stephan F. Gohmann & Myra J. McCrickard & Frank Slesnick, 1998. "Age-Earnings Profiles Estimates: Do They Change Over Time?," Journal of Forensic Economics, National Association of Forensic Economics, vol. 11(3), pages 173-188, September.
    3. Hubbard, R Glenn & Skinner, Jonathan & Zeldes, Stephen P, 1995. "Precautionary Saving and Social Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 360-399, April.
    4. Huggett, Mark & Ventura, Gustavo, 2000. "Understanding why high income households save more than low income households," Journal of Monetary Economics, Elsevier, vol. 45(2), pages 361-397, April.
    5. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    6. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 61-156.
    7. Hotchkiss, Julie L, 1991. "The Definition of Part-Time Employment: A Switching Regression Model with Unknown Sample Selection," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(4), pages 899-917, November.
    8. Katharine G. Abraham & Robert Shimer, 2001. "Changes in Unemployment Duration and Labor Force Attachment," NBER Working Papers 8513, National Bureau of Economic Research, Inc.
    9. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 82(3), pages 371-392, June.
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    Cited by:

    1. Higgins, Tim & Sinning, Mathias, 2013. "Modeling income dynamics for public policy design: An application to income contingent student loans," Economics of Education Review, Elsevier, vol. 37(C), pages 273-285.
    2. Jonathan A. Schwabish, 2006. "Earnings Inequality and High Earners: Changes During and after the Stock Market Boom of the 1990s: Working Paper 2006-06," Working Papers 17738, Congressional Budget Office.

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