Studies of Welfare Populations Data Collection and Research Issues (2002) / Chapter Skim
Currently Skimming:
9 Measuring Employment and Income for Low-Income Populations with Administrative and Survey Data
9 Measuring Employment and Income for Low-Income Populations with Administrative and Survey Data
Pages 275-315
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 275... ...
assess the well-being and labor market attachment of low-income and welfare populations at the national, state, and local levels; (2) evaluate welfare reform and learn the effects of specific policies, such as time limits and sanctions; and (3)
|
From page 276... ...
Recent debates between the states and the federal government, for example, over employment targets and associated sanctions mandated under PRWORA hinged crucially on exactly how the fraction of a state's caseload that is employed would be measured. Furthermore, the conclusions of several recent assessments of the impacts of welfare reform and caseload decline appear to depend on how income and employment of welfare leavers and welfare-eligible populations are measured.2 In this paper we assess the strengths and weaknesses of using survey or administrative data to measure the employment and income of low-income populations.
|
From page 277... ...
Surveys such as the CPS and, especially, the SIPP, attempt to gather a comprehensive set of income elements, including labor earnings, cash benefits derived from social programs, and income from assets. In contrast, administrative data sources often contain only information on a single type of income (as in the case of UI earnings)
|
From page 278... ...
The remainder of this paper is organized as follows: We characterize the strengths and weaknesses of income and employment measures derived from surveys, with particular emphasis on national surveys, from UI wage records, and from tax returns. For each data source, we summarize the findings of studies that directly compare the income and employment measures derived from that source with measures derived from at least one other data source.
|
From page 279... ...
Most of our analysis focuses on the use of national surveys CPS and SIPP in particular because of the availability of several high-quality studies that compare their income and employment measures to other data sources. Where available, we also summarize studies that assess income and employment measurement with more targeted surveys.
|
From page 280... ...
Both of these surveys gathered detailed information on labor market earnings and employment status of respondents, earnings and some employment information on other adult household members, and some information on other sources of income, including income from various public assistance programs. One of the advantages of longitudinal data sets such as SIPP, PSID, and NLSY is that they allow one to monitor the entry into and exit from welfare or other social programs and the factors related to welfare dynamics, including changes in earnings and family structure.
|
From page 281... ...
Results from these cognitive interviews are used to improve the way questions are asked, with the goal of improving the quality of the data on key variables such as income and program participation.7 Typically, this sort of sophisticated assessment can only be done on large-scale, national surveys. To summarize, there are several potential strengths of using survey data to measure income and employment.
|
From page 282... ...
· National surveys provide consistent information across states and localities. · Surveys can be flexible, so their developers can control what information is collected about income and employment, and this information can be improved over time Potential Weaknesses Three general concerns arise with the nationally representative surveys that keep them from being the solution, or "core" data, for understanding the effects of welfare reform.
|
From page 283... ...
results suggest that the decline in benefits reported in the CPS results from both a reduction in the coverage of families receiving AFDC and from an underrepresentation of benefits conditional on receipt, though the second factor seems quantitatively more important than the first. The third potential weakness of national surveys is that there is little or no "cost" to respondents of misreporting of income, employment, or other circumstances.l° 10Shroder and Martin (1996)
|
From page 284... ...
To summarize, there are two primary potential weaknesses with using national survey data to measure income and employment of low-income populations. They are the following: · Sample sizes in national surveys often are small for studies that focus on welfare or low-income populations, or that wish to examine specific targeted groups, such as current or former welfare recipients.
|
From page 285... ...
tax returns in selected years for the first half of the l990s. The sample is limited to nonjoint returns and selected joint returns where each filer matches a March CPS person.
|
From page 286... ...
Below $10,000 and above $150,000, at least half the observations have discrepancies exceeding 20 percent, and most are larger than that. Discrepancies are both positive and negative, though, as expected, CPS incomes tend to be larger than incomes reported on tax returns in the bottom of the income distribution, and CPS incomes tend to be smaller than incomes reported on tax returns in the top of the income distribution.
|
From page 287... ...
(1997) also provide a brief discussion of income data collected as part of the Gary Negative Income Tax Experiment (from the late 1960s and early 1970s)
|
From page 288... ...
(1993) examine wage records in the PSID for unionized men working fulltime at an hourly rate in one specific durable goods manufacturing firm in 1983 and 1987.
|
From page 289... ...
, using two waves of the 1994 SIPP panel, did a comprehensive study of the accuracy of reporting of transfer program participation. They discuss evidence of substantial underreporting of program participation among true program participants, on the order of 50 percent for Workers' Compensation and AFDC,39 percent for UI and 23 percent for food stamps and Supplemental Security Income.
|
From page 290... ...
The apparent decline in program coverage in the CPS is also worrisome.~5 UNEMPLOYMENT INSURANCE WAGE RECORDS DATA TO MEASURE INCOME AND EMPLOYMENT FOR LOW-INCOME POPULATION We now consider the evidence on using UI wage records to measure the income and employment status of low-income populations. UI wage records contain the earnings reported by employers (on a quarterly basis)
|
From page 291... ...
(Note that state UI authorities control access to UI wage records and the Social Security numbers necessary to link these data to other data sources for individuals, in order to safeguard the confidentiality of this information.) UI wage records are commonly used in state-level evaluations of welfare reform and other social programs.
|
From page 292... ...
If, for example, 8 percent of all jobs are missing from UI wage records, but all 8 percent are low-income workers (which in turn is a much larger fraction of all low-income workers) , the usefulness of UI data in monitoring the effects of welfare reform would be severely eroded.
|
From page 293... ...
It is not clear if the issues raised in the Illinois UI audits are associated strictly with independent contractors (in the technical sense) or more broadly with flexible staffing arrangements.
|
From page 294... ...
The second potentially major weakness with using UI data for evaluating welfare reform is that they contain limited accompanying demographic information on individuals, and, more importantly, may not allow one to form an accurate measure of family income. In assessing the impacts of welfare reform, many argue that it is important to assess how these changes affect the well-being of children and the families in which they reside.
|
From page 295... ...
To summarize, using UI wage records to measure income and employment has two potential weaknesses. These are as follows: .
|
From page 296... ...
The investigators had access to separate data files containing UI wage records for the full sample of terminees, where the latter information was drawn from the UI systems for the 11 Midwestern states included in this study.
|
From page 297... ...
of a small sample of recent welfare recipients have missing employment episodes in UI data. 22They do not discuss independent contractor issues that are the focus of Blakemore et al.
|
From page 298... ...
They describe their study as attempting "to determine whether wage records reported by employers to state unemployment insurance agencies provide a valid alternative to more costly retrospective sample surveys
|
From page 299... ...
Another, and slightly different, comparison of measurement of employment status and wage income across two different data sources for a sample of individuals who were provided access to JTPA services is found in Kornfeld and Bloom (1999~. They assess how UI and survey data differ, where the latter was conducted as part of the National JTPA Study, in estimating the levels of earnings and the differences in mean earnings and employment rates between experimental and control group members, where control group members were denied access to JTPA services.
|
From page 300... ...
Survey earnings reports for adult women and female youth are 24 to 34 percent higher than reported UI earnings levels. There was also wide variation across JTPA sites in the size of earnings discrepancies between survey and UI data, but the survey always yielded larger numbers than did the UI data.
|
From page 301... ...
In contrast, UI data appear more likely to miss 'average earnings' quarters where mean earnings are similar to when both data sources report employment. This might be due to random errors in matching UI wage records, out-of-state jobs, jobs that are not covered by UI, and/or earnings that are 'off the books."' (p.
|
From page 302... ...
From the direct comparisons of the data sources used to measure income and employment status found in the studies reviewed above, we draw the following tentative conclusions about the differences between using survey versus UI data: . Earnings in UI data generally appear be lower than earnings reported in survey data.
|
From page 303... ...
Here we outline the potential strengths and weaknesses of these data sources and briefly summarize a recent comparison of UI wage and tax return data for a disadvantaged population drawn from the AFDC caseload in California. Potential Strengths Compared to using surveys or UI records, using tax return data for measuring the income and employment has at least two potential advantages.
|
From page 304... ...
. The definition of income that is reported is broader than that provided by unemployment insurance data, including, most importantly, self-employment income and in cases where a person is married and they file a joint return, spousal income.25 Potential Weaknesses Several potential weaknesses are associated with using tax returns data to measure income and employment.
|
From page 305... ...
To summarize, using tax return data to measure income and employment has several potential weaknesses. These are the following: .
|
From page 306... ...
From Table 9-8, employment rates of the pointin-time AFDC-FG caseload were 26 percent using UI data and 22 percent using tax return data. The corresponding rates for AFDC-U cases were 31 percent for both data sources.
|
From page 307... ...
. Although tax return data and UI data would give similar perspectives about employment patterns of the 4-county California sample, it is clear that each sample covers workers that the other misses.
|
From page 308... ...
who filed tax returns had no corresponding UI record.30 Over 40 percent (11.41/26) of those with positive UI earnings did not file taxes.31 Of 30We took great care in the analysis to make sure the comparison samples did not have changes in marital status and had a full four quarters of UI data (including zero quarters)
|
From page 309... ...
There is also little evidence that self-employment income plays an important role in earnings differences between tax return and UI income. Based on comparisons between UI and tax return data, we offer several tentative conclusions: · Tax return and UI data appear to give very similar information on employment rates of the four-county California caseload.
|
From page 310... ...
Census Bureau to match data from UI wage records and administrative data on AFDC/TANF participation for the California subsamples of several waves of the SIPP.32 The work of this project should yield some more recent information on both the welfare participation underreporting and income reporting issues. This study or comparable ones done with matches of the SIPP with administrative data for the subsamples from other states also may provide some insight into the impact of changes in family structure on income reporting for welfare leavers by exploiting the (limited)
|
From page 311... ...
Learning more about the quality of this data source for measuring income is extremely important because UI wage data presumably will continue to be a core resource in state and local evaluations of the effects of welfare reform. Several issues related to UI wage data appear to need further scrutiny.
|
From page 312... ...
. Tax returns data also may be useful to learn more about whether the discrepancies between UI wage data and income measures from tax returns noted in that study are the result of differences in family composition and the "composition" of income reported on tax returns.
|
From page 313... ...
Scoon-Rogers 1996 Evaluating the Quality Income Data Collection in the Annual Supplement to the March Current Population Survey and the Survey of Income and Program Participation. SIPP Working Paper 96-04.
|
From page 314... ...
Bureau of Labor Statistics. 1998 Note on the Possible Effects of Welfare Reform on Labor Market Activities: What Can Be Gleaned from the March CPS.
|
From page 315... ...
Stevens, David W., Liping Chen, and Jinping Shi 1994 The Use of UI Wage Records for JTPA Performance Management in Maryland. Unpublished paper, The Jacob France Center at the University of Baltimore, September 19.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.