Measurement error in the SIPP: Evidence from administrative matched records

Abstract

Validation studies that compare survey to administrative earnings are useful to assess the extent and implications of measurement error in labor market data. While previous work typically used small restrictive samples with topcoded earnings, this paper matches data from the Survey of Income and Program Participation (SIPP) to Social Security Administration records, which contains uncapped administrative earnings. Results show that SIPP respondents, on average, underreport earnings by a significant amount ($2,800). Consistent with previous studies, measurement error is negatively correlated with true earnings. Finally, unlike previous work, we find a consistent pattern between measurement error and covariates: factors positively associated with earnings are negatively correlated with measurement error.