Trouble in the Tails? Earnings Non-Response and Response Bias across the Distribution

Earnings non-response in household surveys is widespread, yet there is limited evidence on whether and how non-response bias affects measured earnings. This paper examines the patterns and consequences of non-response using internal Current Population Survey (CPS ASEC) individual records matched to administrative SSA data on earnings for calendar years 2005-2010. Our findings include the following. Non-response across the earnings distribution, conditional on covariates, is U-shaped, with left-tail “strugglers” and right-tail “stars” being least likely to report earnings. Household surveys report too few low earners and too few extremely high earners. Particularly high non-response is seen among women with low earnings and among men with very high earnings. Throughout much of the earnings distribution non-response is ignorable, but there exists trouble in the tails.