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Finance and Economics Discussion Series: Data for paper 2011-60

Rising Inequality: Transitory or Permanent? New Evidence from a U.S. Panel of Household Income 1987-2006

Jason DeBacker, Bradley Heim, Vasia Panousi, and Ivan Vidangos

Figure Ia. Cross-Section Variance (of the log) by Year

Year Male Earnings Pre-Tax Household Income After-Tax Household Income
1987 0.6105078225 0.6975924484 0.6133395856
1988 0.6608714436 0.7313841441 0.6454354921
1989 0.6607901521 0.7465132801 0.6576236836
1990 0.6532680625 0.7464614404 0.6612291856
1991 0.6576723409 0.7515849636 0.6576074649
1992 0.6942888976 0.7805369104 0.6830361316
1993 0.7050457089 0.7973775616 0.6840447849
1994 0.68459076 0.7973061264 0.7094355984
1995 0.6930895504 0.8246637721 0.7304266225
1996 0.6932560644 0.8426872804 0.7435267984
1997 0.6653338624 0.8634869776 0.7128593761
1998 0.6796683364 0.8857068544 0.7403397849
1999 0.6776417761 0.8946700569 0.7460640625
2000 0.6749115409 0.9013033969 0.7528859361
2001 0.6750922896 0.8764517161 0.7271996176
2002 0.70207641 0.8762270449 0.7298114041
2003 0.7104466944 0.8797314436 0.7411660281
2004 0.70576801 0.9184730569 0.7747696441
2005 0.70576801 0.9165381696 0.7734498916
2006 0.72267001 0.92563641 0.7866448249
% change 18 33 28

Figure Ib. Cross-Section Variance Gini Coefficient by Year

year Male Earnings Pre-Tax Household Income After-Tax Household Income
1987 0.40466236 0.44362 0.42152
1988 0.42083159 0.46118 0.44075
1989 0.4145559 0.45893 0.44032
1990 0.42053038 0.46142 0.44285
1991 0.43952398 0.47113 0.4487
1992 0.45241401 0.47861 0.45556
1993 0.44605043 0.48169 0.45279
1994 0.44146343 0.47784 0.45305
1995 0.44799824 0.4909 0.46368
1996 0.44057177 0.50086 0.47435
1997 0.43917822 0.50927 0.47701
1998 0.43534042 0.52303 0.49251
1999 0.44005484 0.52218 0.48983
2000 0.45590772 0.52881 0.49616
2001 0.43582003 0.50739 0.47414
2002 0.45171952 0.52124 0.48492
2003 0.44779141 0.51272 0.4807
2004 0.45436854 0.52792 0.49506
2005 0.46019158 0.54878 0.51674
2006 0.47670962 0.54652 0.51494
% change 18 23 22

Figure 2a: Decomposition of Cross-Sectional Variance: Male Earnings Baseline Model

Year Permanent Transitory Total
1987 0.356874 0.2257518 0.5826258
1988 0.3776924 0.2500364 0.6277288
1989 0.3983247 0.2245971 0.6229219
1990 0.3902359 0.2228279 0.6130638
1991 0.4016226 0.2142728 0.6158954
1992 0.4192957 0.2220024 0.641298
1993 0.4039514 0.2476125 0.6515639
1994 0.4018761 0.2364046 0.6382808
1995 0.4157999 0.2318456 0.6476455
1996 0.4225017 0.2247457 0.6472473
1997 0.4209947 0.2062571 0.6272517
1998 0.4228618 0.2180875 0.6409492
1999 0.4402336 0.2038252 0.6440588
2000 0.4405039 0.2068126 0.6473164
2001 0.4381592 0.2094687 0.6476279
2002 0.4531073 0.2241859 0.6772932
2003 0.4260697 0.2573309 0.6834006
2004 0.430103 0.241713 0.6718159
2005 0.4449865 0.2232377 0.6682243
2006 0.4628043 0.2215781 0.6843824
change 0.11 -0.00 0.10
% change 30 -2 17

Figure 2b: Decomposition of Cross-Sectional Variance: Male Earnings Restricted Model 1 (no heterog. profiles)

Year Permanent Transitory Total
1987 0.1767981 0.4345394 0.6113376
1988 0.2062963 0.4230122 0.6293085
1989 0.2329352 0.3913458 0.624281
1990 0.2230684 0.3964925 0.6195609
1991 0.2354954 0.3834845 0.6189799
1992 0.2518896 0.3880226 0.6399122
1993 0.2349379 0.4107109 0.6456489
1994 0.2341434 0.3978371 0.6319804
1995 0.252264 0.3836064 0.6358703
1996 0.2608414 0.3745351 0.6353765
1997 0.2627665 0.3554835 0.6182501
1998 0.2643499 0.3678726 0.6322225
1999 0.2852408 0.3505271 0.6357678
2000 0.285388 0.3571544 0.6425424
2001 0.2856316 0.3595959 0.6452275
2002 0.2984418 0.3794637 0.6779055
2003 0.2727944 0.4115937 0.6843881
2004 0.2791593 0.3943876 0.6735469
2005 0.2942057 0.3756587 0.6698643
2006 0.3079906 0.3747804 0.682771
% change 74 -14 12

Figure 2c: Decomposition of Cross-Sectional Variance: Male Earnings Restricted Model 2 (no random walk)

Year Permanent Transitory Total
1987 0.3096901 0.2788495 0.5885396
1988 0.3285609 0.300462 0.6290228
1989 0.3491877 0.2743792 0.6235669
1990 0.3410643 0.2740905 0.6151547
1991 0.3528087 0.2639462 0.6167549
1992 0.3700623 0.2707667 0.640829
1993 0.3558117 0.2943709 0.6501826
1994 0.3541693 0.2836738 0.6378431
1995 0.368116 0.2783063 0.6464222
1996 0.3756867 0.2691245 0.6448112
1997 0.3754417 0.250782 0.6262237
1998 0.3769594 0.2630725 0.6400319
1999 0.3941576 0.2493151 0.6434727
2000 0.3940551 0.2538062 0.6478613
2001 0.3915067 0.2573066 0.6488133
2002 0.4038665 0.2760824 0.6799489
2003 0.3770107 0.308017 0.6850277
2004 0.3809447 0.2922836 0.6732284
2005 0.3943472 0.2758498 0.670197
2006 0.410676 0.2739207 0.6845966
% change 33 -2 16

Figure 2d: Decomposition of Cross-Sectional Variance: Male Earnings Restricted Model 3 (no MA component)

Year Permanent Transitory Total
1987 0.40 0.18 0.58
1988 0.43 0.20 0.63
1989 0.45 0.17 0.62
1990 0.44 0.17 0.61
1991 0.45 0.16 0.62
1992 0.47 0.17 0.64
1993 0.45 0.20 0.65
1994 0.45 0.19 0.64
1995 0.47 0.18 0.65
1996 0.47 0.18 0.65
1997 0.47 0.16 0.63
1998 0.47 0.17 0.64
1999 0.49 0.16 0.65
2000 0.49 0.16 0.65
2001 0.49 0.16 0.65
2002 0.50 0.17 0.67
2003 0.48 0.20 0.68
2004 0.48 0.19 0.67
2005 0.50 0.17 0.67
2006 0.52 0.17 0.68
% change 28 -4 18

Figure 3a: KSS Decomposition of Cross-Section Variance: Male Earnings

Year Permanent Transitory Total
1989 0.51041 0.07542 0.58583
1990 0.51222 0.07523 0.58745
1991 0.50801 0.07761 0.58562
1992 0.51972 0.075 0.59472
1993 0.5236 0.0887 0.6123
1994 0.53135 0.07969 0.61104
1995 0.52957 0.07882 0.60839
1996 0.53417 0.0756 0.60977
1997 0.52396 0.07156 0.59552
1998 0.53529 0.06997 0.60526
1999 0.5459 0.06862 0.61452
2000 0.55416 0.07315 0.62731
2001 0.54306 0.07116 0.61422
2002 0.55665 0.07642 0.63307
2003 0.5484 0.08441 0.63281
2004 0.55344 0.07749 0.63093

Figure 3b: BPEA Decomposition of Cross-Sectional Variance: Male Earnings

Year Permanent Transitory Total
1989 0.48228 0.12447 0.60675
1990 0.48377 0.12618 0.60995
1991 0.47884 0.12946 0.6083
1992 0.49046 0.12975 0.62021
1993 0.49349 0.13373 0.62722
1994 0.50149 0.13277 0.63426
1995 0.50068 0.12832 0.629
1996 0.50613 0.12406 0.63019
1997 0.49702 0.1189 0.61592
1998 0.50794 0.12046 0.6284
1999 0.51939 0.11686 0.63625
2000 0.52661 0.12141 0.64802
2001 0.51448 0.12572 0.6402
2002 0.52756 0.12763 0.65519
2003 0.51952 0.12612 0.64564
2004 0.52511 0.12326 0.64837

Figure 4: Standard Deviation of One-Year and Two-Year Percentage Changes (Volatility): Male Earnings

Year One-Year Percent Changes Two-Year Percent Changes
1988 0.40088  
1989 0.40418 0.45879
1990 0.42967 0.48557
1991 0.41082 0.49741
1992 0.39758 0.46928
1993 0.43034 0.50701
1994 0.43325 0.50195
1995 0.42944 0.52399
1996 0.40062 0.48824
1997 0.40729 0.47065
1998 0.38575 0.478
1999 0.39171 0.47322
2000 0.39629 0.4804
2001 0.39075 0.4583
2002 0.40819 0.48973
2003 0.42973 0.50842
2004 0.42424 0.48868
2005 0.40728 0.48076
2006 0.40399 0.47607
change 0.00311 0.01728
% change 0.775793254839354 3.76642908520238

Figure 5a: Decomposition of Cross-Section Variance: Pre-tax Household Income Baseline Model: Male Earnings Sample

Year Permanent Transitory Total
1987 0.24 0.19 0.43
1988 0.27 0.19 0.46
1989 0.28 0.20 0.48
1990 0.28 0.19 0.46
1991 0.29 0.18 0.47
1992 0.30 0.19 0.49
1993 0.29 0.21 0.50
1994 0.29 0.19 0.48
1995 0.30 0.19 0.49
1996 0.32 0.18 0.50
1997 0.34 0.18 0.52
1998 0.33 0.20 0.53
1999 0.36 0.19 0.55
2000 0.34 0.20 0.54
2001 0.32 0.22 0.54
2002 0.33 0.23 0.56
2003 0.31 0.24 0.54
2004 0.31 0.24 0.56
2005 0.32 0.24 0.56
2006 0.35 0.24 0.59
% change 44 29 37

Figure 5b: Decomposition of Cross-Sectional Variance: Pre-Tax Household Income Restricted Model RM2 (no random walk): Male Earnings Sample

Year Permanent Transitory Total
1987 0.32 0.19 0.51
1988 0.35 0.18 0.53
1989 0.35 0.19 0.54
1990 0.35 0.19 0.54
1991 0.36 0.18 0.54
1992 0.37 0.19 0.56
1993 0.37 0.20 0.57
1994 0.37 0.19 0.56
1995 0.39 0.18 0.58
1996 0.41 0.17 0.59
1997 0.43 0.19 0.62
1998 0.44 0.20 0.63
1999 0.45 0.19 0.64
2000 0.44 0.20 0.64
2001 0.41 0.23 0.63
2002 0.42 0.23 0.64
2003 0.40 0.24 0.64
2004 0.43 0.24 0.67
2005 0.43 0.24 0.67
2006 0.43 0.24 0.67
% change 36 26 32

Figure 6: Standard Deviation of One-Year and Two-Year Percentage Changes (Volatility): Pre-Tax Household Income: Male Earnings Sample

Year One-Year Percent Changes Two-Year Percent Changes
1988 0.34  
1989 0.35 0.40
1990 0.36 0.41
1991 0.34 0.41
1992 0.34 0.40
1993 0.36 0.42
1994 0.37 0.42
1995 0.36 0.43
1996 0.34 0.42
1997 0.37 0.42
1998 0.36 0.43
1999 0.38 0.43
2000 0.38 0.45
2001 0.37 0.43
2002 0.39 0.45
2003 0.38 0.44
2004 0.38 0.44
2005 0.38 0.44
2006 0.39 0.45
% change 13 12

Figure 7a: Decomposition of Cross-Section Variance: Pre-tax Household Income Baseline Model: Full Household Sample

Year Permanent Transitory Total
1987 0.23 0.20 0.43
1988 0.26 0.20 0.46
1989 0.27 0.20 0.47
1990 0.27 0.20 0.46
1991 0.28 0.19 0.47
1992 0.29 0.20 0.49
1993 0.28 0.22 0.49
1994 0.28 0.20 0.48
1995 0.29 0.20 0.49
1996 0.31 0.18 0.49
1997 0.33 0.19 0.52
1998 0.32 0.21 0.53
1999 0.35 0.19 0.54
2000 0.33 0.21 0.54
2001 0.31 0.23 0.54
2002 0.32 0.24 0.56
2003 0.30 0.25 0.54
2004 0.30 0.25 0.56
2005 0.31 0.25 0.56
2006 0.34 0.25 0.59
% change 44 28 37

Figure 7b: Decomposition of Cross-Sectional Variance: Pre-Tax Household Income Restricted Model RM2 (no random walk): Full Household Sample

Year Permanent Transitory Total
1987 0.27 0.24 0.51
1988 0.29 0.24 0.53
1989 0.30 0.24 0.54
1990 0.30 0.24 0.54
1991 0.31 0.24 0.54
1992 0.32 0.25 0.56
1993 0.32 0.25 0.57
1994 0.32 0.24 0.56
1995 0.34 0.24 0.58
1996 0.36 0.23 0.59
1997 0.38 0.24 0.62
1998 0.38 0.25 0.63
1999 0.39 0.24 0.64
2000 0.39 0.26 0.64
2001 0.35 0.28 0.64
2002 0.36 0.29 0.65
2003 0.34 0.30 0.64
2004 0.36 0.30 0.67
2005 0.36 0.30 0.67
2006 0.37 0.30 0.67
% change 38 24 31

Figure 8: Decomposition of Cross-Section Variance: Pre-tax and After-Tax Household Income Baseline Model: Male Earnings Sample

Year Permanent After-Tax Transitory After-Tax Total After-Tax Permanent Pre-Tax Transitory Pre-Tax Total Pre-Tax % reduction total variance
1987 0.20 0.17 0.37 0.23 0.20 0.43 14
1988 0.23 0.17 0.40 0.26 0.20 0.46 13
1989 0.24 0.18 0.41 0.27 0.20 0.47 13
1990 0.23 0.17 0.41 0.27 0.20 0.46 12
1991 0.24 0.16 0.41 0.28 0.19 0.47 14
1992 0.25 0.17 0.42 0.29 0.20 0.49 14
1993 0.23 0.18 0.42 0.28 0.22 0.49 16
1994 0.25 0.18 0.42 0.28 0.20 0.48 13
1995 0.25 0.17 0.43 0.29 0.20 0.49 13
1996 0.27 0.16 0.42 0.31 0.18 0.49 14
1997 0.28 0.15 0.43 0.33 0.19 0.52 17
1998 0.27 0.17 0.44 0.32 0.21 0.53 17
1999 0.29 0.16 0.45 0.35 0.19 0.54 17
2000 0.28 0.17 0.45 0.33 0.21 0.54 17
2001 0.26 0.19 0.44 0.31 0.23 0.54 17
2002 0.26 0.20 0.46 0.32 0.24 0.56 18
2003 0.25 0.20 0.45 0.30 0.25 0.54 17
2004 0.25 0.21 0.46 0.30 0.25 0.56 17
2005 0.26 0.21 0.47 0.31 0.25 0.56 16
2006 0.28 0.22 0.50 0.34 0.25 0.59 16
% change 40.1% 27.6% 34.4% 44.2% 28.3% 36.9%  

Figure A1: Lifecycle Variance Profile of Male Earnings Controlling for Year Effects: Data Baseline Model and Restricted Model 2 (no heterogenous profiles)

Age (PE) Age Year Effects Baseline RM1
1 25 0.5351058 0.5110987 0.4668187
2 26 0.5380414 0.5289164 0.497589
3 27 0.5672668 0.5400025 0.5246621
4 28 0.572295 0.5500876 0.5484709
5 29 0.57558 0.5610768 0.5694038
6 30 0.5932141 0.5733863 0.5879689
7 31 0.5793593 0.5868587 0.6045479
8 32 0.6029556 0.6011476 0.6194179
9 33 0.6213852 0.6158629 0.6328279
10 34 0.6467999 0.6306272 0.6449472
11 35 0.645934 0.645098 0.6559732
12 36 0.6717213 0.6589769 0.6660338
13 37 0.6640821 0.6720122 0.675255
14 38 0.6878966 0.684001 0.683742
15 39 0.693668 0.6947896 0.6915884
16 40 0.7073116 0.7042736 0.6989009
17 41 0.6846617 0.7123982 0.705758
18 42 0.7013742 0.7191576 0.7122182
19 43 0.7219391 0.724596 0.7183405
20 44 0.7127445 0.728807 0.7241625
21 45 0.7181765 0.7319333 0.7297242
22 46 0.7192419 0.7341676 0.7350639
23 47 0.737682 0.7357518 0.7402141
24 48 0.7295138 0.7369774 0.7452025
25 49 0.7634519 0.7381853 0.7500529
26 50 0.7408592 0.7397661 0.7547855
27 51 0.756309 0.7421597 0.7594175
28 52 0.7409425 0.7458555 0.7639638
29 53 0.7484248 0.7513924 0.7684368
30 54 0.7988153 0.759359 0.7728473
31 55 0.7765218 0.7703932 0.7772045
32 56 0.8173578 0.7851824 0.7815161
33 57 0.8026038 0.8044635 0.7857889
34 58 0.8316165 0.8290231 0.7900285
35 59 0.8615699 0.8596969 0.7942399

Figure A2a: KSS Decomposition of Cross-Sectional Variance P=3: Male Earnings

Year Permanent Transitory Total meanvarres_3
1988 0.53941 0.04862 0.58803 0.59786
1989 0.54314 0.05067 0.59381 0.60857
1990 0.53258 0.05109 0.58367 0.60438
1991 0.53698 0.04859 0.58557 0.61159
1992 0.55738 0.0488 0.60618 0.62685
1993 0.55669 0.0551 0.61179 0.63424
1994 0.56115 0.05219 0.61334 0.63414
1995 0.55838 0.0501 0.60848 0.63188
1996 0.56572 0.04754 0.61326 0.62897
1997 0.55144 0.04503 0.59647 0.6282
1998 0.56614 0.04264 0.60878 0.62776
1999 0.56937 0.04359 0.61296 0.63505
2000 0.57917 0.0453 0.62447 0.63716
2001 0.57124 0.04493 0.61617 0.6456
2002 0.58979 0.04933 0.63912 0.65501
2003 0.58365 0.05422 0.63787 0.66237
2004 0.58096 0.05058 0.63154 0.66049
2005 0.5977 0.04775 0.64545 0.66284

Figure A2b: KSS Decomposition of Cross-Sectional Variance P=7: Male Earnings

Year Permanent Transitory Total meanvarres_7
1990 0.49173 0.09386 0.58559 0.61076
1991 0.48631 0.09692 0.58323 0.61878
1992 0.49736 0.09605 0.59341 0.62158
1993 0.50099 0.11078 0.61177 0.62523
1994 0.51008 0.09894 0.60902 0.62746
1995 0.51183 0.09733 0.60916 0.63151
1996 0.51909 0.09584 0.61493 0.6318
1997 0.50565 0.08948 0.59513 0.63102
1998 0.51945 0.08845 0.6079 0.63286
1999 0.52764 0.08663 0.61427 0.63682
2000 0.53541 0.0926 0.62801 0.64101
2001 0.52273 0.08887 0.6116 0.64712
2002 0.53767 0.09442 0.63209 0.65058
2003 0.52953 0.10727 0.6368 0.656

Figure A3a: Restricted Model 2 Variance Decomposition: Male Earnings

Year Permanent Transitory Total
1987 0.31 0.28 0.59
1988 0.33 0.30 0.63
1989 0.35 0.27 0.62
1990 0.34 0.27 0.62
1991 0.35 0.26 0.62
1992 0.37 0.27 0.64
1993 0.36 0.29 0.65
1994 0.35 0.28 0.64
1995 0.37 0.28 0.65
1996 0.38 0.27 0.64
1997 0.38 0.25 0.63
1998 0.38 0.26 0.64
1999 0.39 0.25 0.64
2000 0.39 0.25 0.65
2001 0.39 0.26 0.65
2002 0.40 0.28 0.68
2003 0.38 0.31 0.69
2004 0.38 0.29 0.67
2005 0.39 0.28 0.67
2006 0.41 0.27 0.68
% change 33 -2 16

Figure A3b: Restricted Model 2 Variance Decomposition: Male Earnings + Spousal Earnings

Year Permanent Transitory Total
1987 0.22 0.24 0.46
1988 0.25 0.25 0.50
1989 0.26 0.25 0.51
1990 0.26 0.25 0.51
1991 0.27 0.24 0.51
1992 0.29 0.26 0.54
1993 0.27 0.26 0.54
1994 0.27 0.25 0.52
1995 0.29 0.24 0.53
1996 0.29 0.23 0.53
1997 0.30 0.22 0.52
1998 0.30 0.24 0.54
1999 0.31 0.23 0.54
2000 0.30 0.24 0.54
2001 0.30 0.25 0.55
2002 0.31 0.26 0.58
2003 0.29 0.28 0.57
2004 0.29 0.27 0.56
2005 0.30 0.26 0.57
2006 0.32 0.26 0.58
% change 45 8 26

Figure A3c: Restricted Model 2 Variance Decomposition: Male Earnings + Spousal Earnings + Transfers

Year Permanent Transitory Total
1987 0.22 0.21 0.43
1988 0.25 0.22 0.46
1989 0.26 0.22 0.48
1990 0.25 0.22 0.47
1991 0.27 0.20 0.47
1992 0.27 0.22 0.49
1993 0.26 0.23 0.49
1994 0.26 0.22 0.48
1995 0.27 0.21 0.49
1996 0.27 0.21 0.49
1997 0.29 0.21 0.50
1998 0.30 0.22 0.52
1999 0.32 0.22 0.53
2000 0.30 0.22 0.53
2001 0.29 0.23 0.52
2002 0.30 0.24 0.54
2003 0.28 0.25 0.53
2004 0.29 0.25 0.54
2005 0.30 0.25 0.55
2006 0.31 0.25 0.56
% change 44 17 31

Figure A3d: Restricted Model 2 Variance Decomposition: Male Earnings + Spousal Earnings + Transfers + Investment Income

Year Permanent Transitory Total
1987 0.24 0.20 0.44
1988 0.27 0.21 0.47
1989 0.28 0.21 0.48
1990 0.27 0.20 0.47
1991 0.28 0.19 0.48
1992 0.28 0.21 0.50
1993 0.27 0.22 0.50
1994 0.28 0.20 0.48
1995 0.29 0.20 0.50
1996 0.30 0.20 0.50
1997 0.32 0.20 0.52
1998 0.32 0.21 0.53
1999 0.34 0.20 0.55
2000 0.33 0.22 0.54
2001 0.31 0.23 0.54
2002 0.32 0.24 0.55
2003 0.30 0.25 0.55
2004 0.30 0.25 0.56
2005 0.31 0.25 0.57
2006 0.33 0.26 0.59
% change 39 29 35

Figure A3e: Restricted Model 2 Variance Decomposition: Total Household Income

Year Permanent Transitory Total
1987 0.23 0.20 0.43
1988 0.26 0.20 0.46
1989 0.27 0.20 0.47
1990 0.27 0.20 0.46
1991 0.28 0.19 0.47
1992 0.29 0.20 0.49
1993 0.28 0.22 0.49
1994 0.28 0.20 0.48
1995 0.29 0.20 0.49
1996 0.31 0.18 0.49
1997 0.33 0.19 0.52
1998 0.32 0.21 0.53
1999 0.35 0.19 0.54
2000 0.33 0.21 0.54
2001 0.31 0.23 0.54
2002 0.32 0.24 0.56
2003 0.30 0.25 0.54
2004 0.30 0.25 0.56
2005 0.31 0.25 0.56
2006 0.34 0.25 0.59
% change 44 28 37

Figure A4a: Variance Decomposition Baseline Model: Male Earnings DiNardo-Fortin-Lemieux reweighting

Year Permanentanent Transitory Total
1987 0.356874 0.2257517 0.5826258
1988 0.3776924 0.2500364 0.6277288
1989 0.3983247 0.2245971 0.6229218
1990 0.3902359 0.2228278 0.6130638
1991 0.4016226 0.2142728 0.6158954
1992 0.4192957 0.2220023 0.641298
1993 0.4039514 0.2476125 0.6515639
1994 0.4018761 0.2364046 0.6382808
1995 0.4157999 0.2318456 0.6476455
1996 0.4225017 0.2247456 0.6472473
1997 0.4209947 0.206257 0.6272517
1998 0.4228618 0.2180874 0.6409492
1999 0.4402336 0.2038252 0.6440587
2000 0.4405039 0.2068126 0.6473164
2001 0.4381592 0.2094686 0.6476278
2002 0.4531073 0.2241858 0.6772932
2003 0.4260697 0.2573309 0.6834006
2004 0.430103 0.2417129 0.6718159
2005 0.4449865 0.2232377 0.6682242
2006 0.4628043 0.221578 0.6843824
% change 30 -2 17

Figure A4b: Variance Decomposition Restricted Model RM2 (no random walk): Pre-Tax Household Income Full Household Income Sample DiNardo-Fortin-Lemieux reweighting

Year Permanentanent Transitory Total
1987 0.2654839 0.2431931 0.5086771
1988 0.2934833 0.2375976 0.5310809
1989 0.297731 0.241575 0.5393059
1990 0.2964273 0.2433234 0.5397507
1991 0.3059811 0.2371738 0.5431549
1992 0.3177759 0.2457669 0.5635428
1993 0.317875 0.2548292 0.5727042
1994 0.3217939 0.241269 0.563063
1995 0.3410037 0.2372056 0.5782092
1996 0.3606274 0.2254483 0.5860757
1997 0.3785556 0.2373711 0.6159268
1998 0.3819785 0.2481365 0.6301151
1999 0.3916819 0.2435838 0.6352657
2000 0.3874816 0.2556077 0.6430893
2001 0.3525679 0.2845056 0.6370736
2002 0.3575424 0.2893822 0.6469245
2003 0.3401908 0.3032193 0.6434101
2004 0.3636282 0.3025304 0.6661586
2005 0.3647079 0.3019747 0.6666826
2006 0.3653707 0.3023992 0.6677699
% change 38 24 31

Figure A5a: Variance Decomposition Baseline Model: Male Earnings Minimum Threshold: One-Half of Full-Year Full-Time Minimum Wage

Year Permanentanent Transitory Total
1987 0.1101844 0.2929588 0.4031432
1988 0.0952923 0.3185141 0.4138064
1989 0.0898799 0.322444 0.4123239
1990 0.0865774 0.323616 0.4101934
1991 0.1076657 0.2984132 0.4060789
1992 0.1109486 0.3053038 0.4162525
1993 0.1050023 0.2999462 0.4049485
1994 0.1056113 0.2952936 0.4009049
1995 0.125656 0.2777769 0.403433
1996 0.1275484 0.2802544 0.4078028
1997 0.1355254 0.2785347 0.4140601
1998 0.1284026 0.2834137 0.4118163
1999 0.1519935 0.2660102 0.4180037
2000 0.1547768 0.2813327 0.4361094
2001 0.1488287 0.2807832 0.4296119
2002 0.1491039 0.2915654 0.4406693
2003 0.1378536 0.2963808 0.4342345
2004 0.1416709 0.2941393 0.4358103
2005 0.1539979 0.2841866 0.4381845
2006 0.1656308 0.2832496 0.4488804
% change 50 -3 11

Figure A5b: Variance Decomposition Restricted Model RM2 (no random walk): Pre-Tax Household Income Full Income Household Income Sample Minimum Threshold: One-Half of Full-Year Full-Time Minimum Wage

Year Permanentanent Transitory Total
1987 0.1603256 0.3044786 0.4648042
1988 0.1769172 0.2943987 0.4713159
1989 0.1847157 0.2923256 0.4770413
1990 0.1811334 0.2872247 0.4683582
1991 0.1952406 0.2850542 0.4802948
1992 0.210503 0.2767264 0.4872294
1993 0.2113311 0.2873919 0.498723
1994 0.2187094 0.2742789 0.4929883
1995 0.2358869 0.273113 0.5089999
1996 0.2614121 0.2527018 0.5141139
1997 0.2791807 0.2585626 0.5377433
1998 0.2723554 0.2719958 0.5443512
1999 0.2879309 0.2638331 0.551764
2000 0.2806282 0.284052 0.5646802
2001 0.2437358 0.3127232 0.556459
2002 0.2463071 0.3214989 0.567806
2003 0.231559 0.3321138 0.5636728
2004 0.2470686 0.3270334 0.574102
2005 0.242277 0.3399364 0.5822134
2006 0.2427773 0.3437132 0.5864905
% change 51 13 26
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