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INCOME AND EARNINGS
PANEL STUDY OF INCOME DYNAMICS 1
Measure: Income and earnings questions from the Expenses, Employment, Income, and Wealth and Active Savings modules of the Panel Study of Income Dynamics
Source
The Panel Study of Income Dynamics (PSID) is sponsored primarily by the National Science Foundation. Substantial additional funding has been provided by the National Institute on Aging, the National Institute of Child Health and Human Development, the Office of the Assistant Secretary for Planning and Evaluation of the United States Department of Health and Human Services, the Economic Research Service of the United States Department of Agriculture, the United States Department of Housing and Urban Development, and the United States Department of Labor. The survey is conducted at the Survey Research Center, Institute for Social Research, University of Michigan.
Population Assessed
The original core sample was reduced from nearly 8,500 families in 1996 to approximately 6,168 in 1997. In 1990, 2,000 Latino households, including families originally from Mexico, Puerto Rico, and Cuba, were added to the sample to increase its national representativeness. Although this sample did represent three major groups of immigrants, it did not include the full range of post-1968 immigrants, Asians in particular. Because of this exclusion and because of a lack of sufficient funding, the Latino sample was dropped after 1995, and a sample of 441 immigrant families was added in 1997. The refreshed sample was 6,434 for 1999 and is projected to grow to almost 7,400 in 2005.
Periodicity
The PSID, first conducted in 1968, is conducted annually. Each year it addresses the income and earnings of the respondent’s household.
Components
Although the entire study focuses on income dynamics, the items used in this document are taken from the expenses; employment; income; wealth and active savings; and housework, child care, and food cost modules. The expenses module addresses monthly or yearly expenses such as car payments, car insurance, and other transportation costs, and education costs. The employment module addresses the employment of all family members old enough to work and the salary per reference period convenient to respondent. The income module addresses the various components of income, including rent, dividends, and interest. The wealth and active savings module addresses the income received from sale of stocks or cashing in of pensions. The housework, child care, and food cost module addresses various expenses of the household, such as child care costs and the receipt of government subsidies, including Women, Infants, and Children (WIC) vouchers and TANF. The reference periods addressed are usually in the past year or since the last interview in the cases of respondents who have participated in the PSID for multiple years.
Procedures for Administration
The head of the household is usually the respondent. The survey is conducted over the phone using computer-assisted interviewing procedures and takes between 20 and 30 minutes to complete.
Psychometrics/Data Quality
To assess the validity of the PSID, the National Science Foundation (NSF) carried out a two-wave validity study. Approximately 500 people were given the PSID instruments (wave 1), and the answers were compared with company records (wave 2). The results show that the measurement error in cross-sectional reports of annual income error is rather low (i.e., the error-to-total variance ratio ranged from .15 to .30). Some trends were found in the error of annual earnings. Workers with lower-than-average earnings tended to overreport their earnings while workers with higher wages tended to underreport them. The error in the reports of annual work hours, in comparison to annual income, is higher, ranging from .28 to .37. The highest error in reporting is in hourly earnings, which ranged from .67 to .69. (Hourly earnings were calculated by dividing annual earnings by annual hours; for more information see the PSID User Guide).
In the case of missing data, the PSID uses several approaches. One approach is informed calculation, distinct from imputation. Resources such as interviewer’s notes are used to determine what the values are. Another approach is judgmental editing: an editor looks at the partial inputs on a case-by-case basis and makes a decision about what the value might be and what might have caused the hole, an accidental keystroke or a change in industry. Only as a last resort are values imputed by a statistical procedure such as “hot deck” or multivariate imputation.
Languages Available
The questionnaires are available in English and Spanish.
Items Included
Because of the large number of questions concerning income and earnings in the PSID, only a few sample questions have been included. The questionnaires are available at the PSID Web site: http://psidonline.isr.umich.edu/Data/
From Wealth and Active Savings Module
Since January 1999, did [you/you or anyone in your family] cash in any part of a pension, private annuity, or IRA?
How much did that amount to, not including any penalties or costs?
Since January 1999, did [you/you or anyone in your family] sell any shares of stock in publicly held corporations, mutual funds, or investment trusts? Altogether, how much money did [you/you or anyone in your family] get from that?
Some people’s assets come from gifts and inheritances. During the last two years, have [you/you or anyone in your family] received any large gifts or inheritances of money or property worth $10,000 or more?
From Income Module
G25a. (Did [you/Q56] receive any other income in 2000) from rent?
G25b. (Did [you/Q56] receive any other income in 2000) from dividends?
G25c. (Did [you/Q56] receive any other income in 2000) from interest?
ELSE IF Q1591 is (4)
G25d. (Did [you/Q56] receive any other income in 2000) from trust funds or royalties?
G25e. (Did [you/Q56] receive any income in 2000) from ADC or AFDC [Aid to Families with Dependent Children]? REFERS TO HEAD ONLY.
G25f. (Did [you/Q56] receive any other income in 2000) from Supplemental Security Income?
G25g. (Did [you/Q56] receive any other income in 2000) from other welfare?
We would like to know about what [you do/your wife does/]—[are you/is she/is he] working now, looking for work, retired, keeping house, a student, or what?
Working Now
Temporarily Laid Off, Sick or Maternity Leave
Looking for Work,
Unemployed
Disabled
Keeping House
Student
On [your/her/his] main job, [are you/is she/is he] self-employed, [are you/is she/is he] employed by someone else, or what?
How much is [your/her/his] salary?
References and Source Documents
The questionnaires are available at the PSID Web site: http://psidonline.isr.umich.edu/Data/.
The user guide is available online: http://psidonline.isr.umich.edu/.
1 The survey descriptions in Appendix B include only background information on the Child Development Supplement of the PSID (PSID-CDS). For more complete information on the PSID, please visit the Web site http://www.isr.umich.edu/src/psid/. (back)
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