Studies of Welfare Populations: Data Collection and Research Issues. Overall Assessment of Using UI Administrative Data to Measure Income and Employment

06/01/2002

Our review of the literature has pointed to three critical concerns that arise with using UI data to measure the earnings and employment of low-income and welfare-eligible populations. The concerns are as follows:

  • First, earnings are available only for individuals, while changes in family composition upon exit from welfare have been shown to have a large bearing on economic well-being. UI data do not allow us to track these changes.
  • Second, there appears to be a substantial problem with some workers being classified as independent contractors, and hence not entering the UI system. Overall gaps in coverage appear to be at least 13 percent and may be significantly higher.
  • Third, even when wages are reported, they appear to be understated by at least 11 to 14 percent (based on the Kornfeld and Bloom comparisons with IRS data) and perhaps more than twice that (based on their comparisons with survey data). Smith (1997) shows, however, that survey responses also can be biased upward.

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