Characteristics of Low-Wage Workers and Their Labor Market Experiences: Evidence from the Mid- to Late 1990s. Advantages of the SIPP Data for the Study

04/30/2004

The 1996 SIPP panel is particularly well suited for the study, for several reasons. First, because it covers a period between late 1995 and early 2000, we can examine the dynamics of the low-wage labor market during the post-PRWORA period. Second, because it contains detailed monthly information on jobs each sample member held during the panel period, we can conduct individual-level longitudinal analyses of employment spells and wage progression.

The SIPP data also have several advantages over other national data sets. Cross-sectional data sets, such as the March Current Population Survey (CPS), can provide point-in-time information on low-wage workers, but they do not allow analyses of individual-level employment and earnings experiences over time. The Panel Study of Income Dynamics (PSID), begun in 1968, is a longitudinal study of a representative sample of people in the United States that contains information through 1999. Thus, the PSID covers the post-PRWORA period and, because it is a long panel, has more information than SIPP on employment histories. However, because PSID data have been collected annually (and recently every other year), compared to every four months for SIPP, recall error is likely to be larger in the PSID. This is a particularly important problem for this study, because the job spells of many low-wage workers are likely to be short. Furthermore, sample sizes are much larger in SIPP (more than 40,000 households were sampled for the 1996 SIPP, whereas the 1999 PSID contains information on only about 7,000 families). The National Longitudinal Survey of Youth (NLSY) is limited to people who were ages 14 to 21 in 1978, so data from the NLSY are not well suited for examining the experiences of low-wage workers of all ages.

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