A test for selection in matched administrative earnings data

Subtitle:

Article type: Research Article

Authors: Bricker, Jesse^a | Engelhardt, Gary V.^{b; *}

Affiliations: [a] Federal Reserve Board, USA | [b] Syracuse University, Syracuse, NY, USA

Correspondence: [*] Corresponding author: Gary V. Engelhardt, 426 Eggers Hall, Syracuse University, Syracuse, NY 13244, USA. Tel.: +1 315 443 4598; Fax: +1 315 443 1081; E-mail:gvengelh@maxwell.syr.edu

Abstract: The matching of administrative records to labor-market surveys is both commonly done and represents an important innovation in the measurement of earnings. However, a potential problem is that this process might introduce sample-selection bias. Individuals typically must give informed consent to have their earnings matched, and consenters may display systematically different labor-market behavior than non-consenters. In this paper, we use the differential timing of the consent process to test whether individuals in the Health and Retirement Study who consented represent a non-random, thus biased sample. In particular, we find that for both men and women there is a general pattern of negative selection across three measures of pre-entry labor-market behavior: labor-force participation, self-employment, and earnings.

Keywords: Earnings, selection bias

DOI: 10.3233/JEM-150392

Journal: Journal of Economic and Social Measurement, vol. 39, no. 4, pp. 247-255, 2014