An Analysis of Sample Selection and the Reliability of Using Short-Term Earnings Averages in SIPP-SSA Matched Data

Abstract

In this paper, we document the extent to which the sample of the Survey of Income and Program Participation that is matched to the Social Security Administration’s administrative earnings records is nationally representative. We conclude that the match bias is small, so selection is not a serious concern. The matched sample over‐represents individuals who are wealthy, who have financial assets or who have received a government‐transfer and under‐represents individuals who attributed from the SIPP. We use this matched sample to examine the relationship between short‐term averages of earnings from the SIPP earnings and average lifetime earnings from the administrative records. Our estimates suggest that using short averages of earnings may understate the effects of permanent income on particular outcomes of interest.