Before 1979, unemployment insurance (UI) benefits were not treated as taxable income in the United States. Several economists criticized this policy on the ground that not taxing UI benefits while taxing earned income allegedly encourages unemployed persons to conduct longer than socially optimal job searches. Since 1979, however, UI benefits received by persons in higher-income families have been subject to income tax. This paper investigates whether the introduction of benefit taxation has had the predicted effect of reducing unemployment duration.The study uses data on a sample of persons that filed for UI in 1978 or 1979 to examine whether high-income claimants collected benefits fo rshorter periods after the tax change than they did before benefits became taxable. As part of the empirical analysis, the paper develops a generalization of the Weibull distribution and applies a limited-dependent-variable technique for this distribution similar to the Tobit technique for the normal distribution. Despite some variation in the results from different model specifications, the analysis presents persuasive evidence of a tax effect on unemployment duration. The 1979 policy change is estimated to have reduced average compensated unemployment duration among the sampled high-income claimants by about one week.

Social scientists and policy analysts have long expressed concern about the extent of intergenerational income mobility in the United States, but remarkably little empirical evidence is available. The few existing estimates of the intergenerational correlation in income have been biased downward by measurement error, unrepresentative samples, or both. New estimates based on intergenerational data from the Panel Study of Income Dynamics imply that the intergenerational correlation in long-run income is at least 0.4, indicating dramatically less mobility than suggested by earlier research. Copyright 1992 by American Economic Association.

Social scientists and policy analysts have long expressed concern about the extent of intergenerational income mobility in the United States, but remarkably little empirical evidence is available. The few existing estimates of the intergenerational correlation in income have been biased downward by measurement error, unrepresentative samples, or both. New estimates based on intergenerational data from the Panel Study of Income Dynamics imply that the intergenerational correlation in long-run income is at least 0.4, indicating dramatically less mobility than suggested by earlier research.

A comparison of the correlations between brothers and neighboring boys in their adult earnings suggests that the earnings resemblance between brothers stems more from growing up in the same family than from growing up in the same neighborhood. Much of the neighbor correlation is explicable in terms of the large earnings differential between urban and nonurban areas combined with the strength with which urbanicity of childhood neighborhood predicts urbanicity of adult location. This pattern is subject to a variety of interpretations, but it is quite different from the usual view of neighborhood effects.

Following an influential article by Angrist and Krueger (1992) on two-sample instrumental variables (TSIV) estimation, numerous empirical researchers have applied a computationally convenient two-sample two-stage least squares (TS2SLS) variant of Angrist and Krueger's estimator. In the two-sample context, unlike the single-sample situation, the IV and 2SLS estimators are numerically distinct. We derive and compare the asymptotic distributions of the two estimators and find that the commonly used TS2SLS estimator is more asymptotically efficient than the TSIV estimator. We also resolve some confusion in the literature about how to estimate standard errors for the TS2SLS estimator.

This note examines the implications of mean-reverting mea-surement error for two influential literatures based on longitudinal survey data: (1) the literature on real wage variation over the business cycle and (2) the literature on intertemporal substitution in labor supply. Accounting for mean-reverting measurement error suggests that real wages may be even more procyclical than indicated by recent longitudinal studies. We also find that the instrumental variables estimator commonly used in intertemporal substitution studies is inconsistent if changes in earnings and hours of work are measured with different degrees of mean reversion, but the magnitude of the resulting inconsistency appears to be small.

Researchers in a variety of important economic literatures have assumed that current income variables as proxies for lifetime income variables follow the textbook errors-in-variables model.In an analysis of Social Security records containing nearly career-long earnings histories for the Health and Retirement Study sample, we find that the relationship between current and lifetime earnings departs substantially from the textbook model in ways that vary systematically over the life cycle.Our results can enable more appropriate analysis of and correction for errors-in-variables bias in a wide range of research that uses current earnings to proxy for lifetime earnings.

Researchers in a variety of important economic literatures have assumed that current income variables as proxies for lifetime income variables follow the textbook errors-in-variables model. In our analysis of Social Security records containing nearly career-long earnings histories for the Health and Retirement Study sample, we find that the relationship between current and lifetime earnings departs substantially from the textbook model in ways that vary systematically over the life cycle. Our results can enable more appropriate analysis of, and correction for, errors-in-variables bias in any research that uses current earnings to proxy for lifetime earnings.

The empirical literature on intergenerational income mobility in the United States has focused predominantly on sons. This paper partly redresses that imbalance by using data from the Panel Study of Income Dynamics to investigate intergenerational mobility among daughters. We find that intergenerational transmission of income status is somewhat weaker for daughters than for sons, but is still quite substantial. We also find that assortative mating is an important element in the intergenerational transmission process. 1Intergenerational Income Mobility among Daughters in the United States I.