Income Data for Policy Analysis: A Comparative Assessment of Eight Surveys. Employment and Earnings in the PSID

12/23/2008

The PSID collects individual earnings from only the head and wife of each sample family, so in comparing the PSID to the Census Bureau surveys, we restrict the estimates of persons with earnings and the total amount of earnings to the head and spouse of the primary family (including “nonfamily” householders—that is, those living with no relatives).

Because the PSID weights sum to substantially less than the total population, the estimates of persons with earnings are lower than the Census Bureau surveys except when we remove unrelated subfamilies and most secondary individuals (the CPS-X estimates). As a percentage of the population, however, the PSID finds a higher overall share of the population with earnings—47.2 percent versus 45.7 percent for the full CPS and 44.9 percent for CPS-X—and with wage and salary income—45.7 percent versus 42.7 percent for the full CPS and 41.9 percent for CPS-X (Table IV.20). But the PSID finds only 1.5 percent with self-employment income compared to 3.0 percent for both the full CPS and CPS-X and 4.6 percent for SIPP.

Because the PSID obtains higher aggregate earnings than any of the Census Bureau surveys, we can compare their aggregate estimates directly—without taking account of the PSID’s smaller weighted population size. We find that the PSID obtains 3 to 5 percent more aggregate earnings than the full CPS in each quintile except the middle quintile, where the PSID aggregate is 3 percent lower than the CPS (Table IV.21). The differences are greater when the PSID is compared to the CPS-X estimates (and essentially identical in the middle quintile). The ACS and SIPP obtain more aggregate earnings from the lowest quintile than the PSID, but the differences in aggregate dollars are small.

Given that the boundaries between quintiles are higher in the PSID than the CPS (recall Table IV.5), the PSID’s consistently higher aggregates across quintile could simply reflect the fact that each PSID quintile includes somewhat higher earners than the corresponding CPS quintile. However, we would very likely see the same pattern if the PSID respondents were uniformly reporting more of their income than their CPS counterparts.

TABLE IV.20

HEADS AND SPOUSES WITH EARNINGS AND WAGE AND SALARY INCOME
Employment CPS ACS SIPP PSID CPS-X1
Millions of Persons
Persons with Earnings 129.01 128.07 126.72 123.31 123.24
Persons with Wages and Salaries 120.63 119.21 113.77 119.49 115.05
Persons with Only Self-Employment 8.38 8.86 12.95 3.81 8.18

 

HEADS AND SPOUSES WITH EARNINGS AND WAGE AND SALARY INCOME (continued)
Employment CPS ACS SIPP PSID CPS-X1
Percent of the Population
Persons with Earnings 45.7 46.1 45.1 47.2 44.9
Persons with Wages and Salaries 42.7 42.9 40.5 45.7 41.9
Persons with Only Self-Employment 3.0 3.2 4.6 1.5 3.0

Source: Mathematica Policy Research, from tabulations of calendar year 2002 income from the 2003 CPS ASEC supplement, the 2001 SIPP panel, and the 2003 PSID, and prior 12 months income, inflation-adjusted to calendar year 2002, from the 2002 ACS.

1.The CPS-X estimates exclude all unrelated subfamilies and most secondary individuals (except unmarried partners of the householder) to mimic the population controls applied to the PSID.

TABLE IV.21

AGGREGATE EARNED INCOME OF FAMILY HEADS AND WIVES BY QUINTILE OF FAMILY INCOME: PSID AND CENSUS BUREAU SURVEYS
Income Estimate CPS ACS SIPP PSID CPS-X1
Billions of Dollars
Aggregate Earned Income 5,043.5 4,803.5 4,367.4 5,178.9 4,898.1
Family Income Quintile
Lowest 169.4 198.4 192.5 177.6 155.6
Second 513.0 529.6 494.7 535.8 494.5
Third 826.8 806.1 729.2 802.4 799.5
Fourth 1,174.4 1,118.4 1,014.7 1,211.3 1,145.8
Highest 2,359.9 2,150.9 1,936.2 2,451.8 2,302.7
Sum through Four Quintiles 2,683.6 2,652.6 2,431.2 2,727.1 2,595.4

 

AGGREGATE EARNED INCOME OF FAMILY HEADS AND WIVES BY QUINTILE OF FAMILY INCOME: PSID AND CENSUS BUREAU SURVEYS(continued)
Income Estimate CPS ACS SIPP PSID CPS-X1
Percent of CPS
Aggregate Income, All Persons 100.0 95.2 86.6 102.7 97.1
Family Income Quintile
Lowest 100.0 117.1 113.6 104.8 91.9
Second 100.0 103.2 96.4 104.4 96.4
Third 100.0 97.5 88.2 97.0 96.7
Fourth 100.0 95.2 86.4 103.1 97.6
Highest 100.0 91.1 82.0 103.9 97.6
Sum through Four Quintiles 100.0 98.8 90.6 101.6 96.7

Source:   Mathematica Policy Research, from tabulations of calendar year 2002 income from the 2003 CPS ASEC supplement, the 2001 SIPP panel, and the 2003 PSID, and prior 12 months income, inflation-adjusted to calendar year 2002, from the 2002 ACS.

1.The CPS-X estimates exclude all unrelated subfamilies and most secondary individuals (except unmarried partners of the householder) to mimic the population controls applied to the PSID.

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