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Federal Reserve Bank of San Francisco
Working Papers in Applied Economic Theory
Earnings mobility and instability, 1969-1995
Mary C. Daly
Greg J. Duncan

We study earnings mobility and instability using data from the Panel Study of Income Dynamics. Our main contribution is to update mobility and instability calculations to include data from the 1990s, although we also provide a number of tests of robustness across mobility and instability indicators and sample definition. All in all, we find few trends in earnings instability since the 1970s, particularly among younger workers. However, we find no evidence that instability continued to increase throughout the 1980s and early 1990s. With regard to mobility, we find greater upward mobility and less downward mobility of middle-income workers in the 1980s relative to the 1970s. The former trend appears to have reversed itself by the middle of the 1990s. Employment-based indicators are consistent with earnings-based indicators in showing increased employment instability between the 1970s and later periods.

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Mary C. Daly & Greg J. Duncan, Earnings mobility and instability, 1969-1995, Federal Reserve Bank of San Francisco, Working Papers in Applied Economic Theory 97-06, 1997.
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Keywords: Wages ; Labor mobility ; Income distribution
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