Studies of Welfare Populations: Data Collection and Research Issues. Unemployment

06/01/2002

In contrast to the small number of studies that assess the quality of household reports of hours worked, there are a number of studies that have examined the quality of unemployment reports. These studies encompass a variety of unemployment measures, including annual number of person-years of unemployment, weekly unemployment rate, occurrence and duration of specific unemployment spells, and total annual unemployment hours. Only one study reported in the literature, the PSID validation study (Duncan and Hill, 1985; Mathiowetz, 1986; Mathiowetz and Duncan, 1988), compares respondents' reports with validation data; the majority of the studies rely on comparisons of estimates based on alternative study designs or examine the consistency in reports of unemployment duration across rounds of data collection. In general, the findings suggest that retrospective reports of unemployment by household respondents underestimate unemployment, regardless of the unemployment measure of interest. Once again, however, these studies focus on the general population; hence our ability to draw inferences to the low income or welfare populations is limited.

The studies by Morganstern and Bartlett (1974), Horvath (1982), and Levine (1993) compare the contemporaneous rate of unemployment as produced by the monthly CPS to the rate resulting from retrospective reporting of unemployment during the previous calendar year.(4) The measures of interest vary from study to study; Morganstern and Bartlett focus on annual number of person-years of unemployment as compared to average estimates of weekly unemployment (Horvath) or an unemployment rate, as discussed by Levine. Regardless of the measure of interest, the empirical findings from the three studies indicate that when compared to the contemporaneous measure, retrospective reports of labor force status result in an underestimate of the unemployment rate.

Across the three studies, the underreporting rate is significant and appears to be related to demographic characteristics of the individual. For example, Morganstern and Bartlett (1974) report discrepancy rates in the range of around 3 percent to 24 percent with the highest discrepancy rates among women (22 percent for black women; 24 percent for white women). Levine compared the contemporaneous and retrospective reports by age, race, and gender. He found the contemporaneous rates to be substantially higher relative to the retrospective reports for teenagers, regardless of race or sex, and for women. Across all of the years of the study, 1970-1988, the retrospective reports for white males, ages 20 to 59, were nearly identical to the contemporaneous reports.

Duncan and Hill (1985) found that the overall estimate of mean number of hours unemployed in years t and t-1 based on employer reports and company records did not differ significantly. However, microlevel comparisons, reported as the average absolute difference between the two sources, were large relative to the average amount of unemployment in each year, but significant only for reports of unemployment occurring in 1982.

In addition to studies examining rates of unemployment, person-years of unemployment, or annual hours of unemployment, several empirical investigations have focused on spell-level information, examining reports of the specific spell and duration of the spell. Using the same data as presented in Duncan and Hill (1985), Mathiowetz and Duncan (1988) found that at the spell level, respondents failed to report more than 60 percent of the individual spells. Levine (1993) found that 35 percent to 60 percent of persons failed to report an unemployment spell one year after the event. In both studies, failure to report a spell of unemployment was related, in part, to the length of the unemployment spell; short spells of unemployment were subject to higher rates of underreporting.

The findings suggest (Poterba and Summers, 1984) that, similar to other types of discrete behaviors and events, the reporting of unemployment is subject to deterioration over time. However, the passage of time may not be the fundamental factor affecting the quality of the reports; rather the complexity of the behavioral experience over longer recall periods appears to be the source of increased response error. Both the microlevel comparisons as well as the comparisons of population estimates suggest that behavioral complexity interferes with the respondent's ability to accurately report unemployment for distant recall periods. Hence we see greater underreporting among population subgroups who traditionally have looser ties to the labor force (teenagers, women). Although longer spells of unemployment appear to be subject to lower levels of errors of omission, a finding that supports other empirical research with respect to the effects of salience, at least one study found that errors in reports of duration were associated negatively with the length of the spell. Whether this is indicative of an error in cognition or an indication of reluctance to report extremely long spells of unemployment (social desirability) is unresolved.

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