Childhood Income Volatility and Adult Outcomes (Job Market Paper)

Abstract: Using data linked across generations in the Panel Study of Income Dynamics, I estimate the relationship between exposure to volatile income during childhood and a set of socioeconomic outcomes in adulthood. The empirical framework is an augmented intergenerational income mobility model that includes controls for income volatility. Income volatility at the family level reflects transitory instability as measured by squared deviations around a family-specific mean. Volatility enters the model both separately and interacted with income level. Asymmetries in volatility are included to account for families experiencing disproportionately negative, positive, or higher levels of income growth over time. In the baseline specification I find that family income instability during childhood has a small, positive association with adult outcomes such as higher adult income, higher education attainment, better health, and greater mobility. However, after accounting for asymmetric effects from extended income growth versus decline, volatility associated with downward mobility is correlated with lower educational attainment. Evidence suggests that volatility exposure generally has a minimal impact on intergenerational outcomes relative to permanent income. Accordingly, a program promoting additional human capital accumulation to raise adult incomes represents one recommended policy response.

Earnings and Income Volatility in America: Evidence from Matched CPS (with James P. Ziliak and Christopher Bollinger)

Abstract: We document trends in earnings and income volatility of individuals and families using matched data in the March Current Population survey from 1973 to 2009. Family income volatility rose by 38 percent over the past four decades, driven both by rising volatility of earnings and non means-tested nonlabor income. The Federal tax and transfer system dampens the magnitude of volatility in any given year, but not the trends. Rising family income volatility is in evidence across race, education, and family structure. Across the life cycle earnings and income volatility declines sharply until age 35, but among skilled workers volatility is U-shaped, Nonparametric Quandt-Andrews tests of unknown change point indicate that overall family income volatility peaked in 1999, with the 2000s characterized by greater short-term volatility rather than a continued secular increase. Most of the increase in family earnings volatility occurred prior to the 1990s, which coincides with the trend volatility of male earnings. The earnings volatility of women fell dramatically between 1973 and 1983, and with the continued secular decline is converging toward levels of men. A variance decomposition of earnings volatility suggests that the trends are driven both by increases in the conditional variance of earnings of continuous workers as well as the variance of the conditional mean of those workers exiting the labor force.

Estimating the Effects of Immigration on Crime in Local Labor Markets

Abstract: Using a unique panel data set of county-level characteristics from 1990-2005, this
paper estimates the relationship between crimes from the FBI Uniform Crime Report and
immigration, based on a population estimate designed by the U.S. Census Bureau. Generally, I
find a positive relationship between crime and immigration at the local labor market level. Tests
for non-separability show the impact of immigration to be sensitive to unemployment. Several
panel data methods are used to account for endogeneity. The positive association that emerges
could be due to a variety of economic and social factors, which are addressed in the paper.