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This study follows the lead of past PSID users and combines these two samples, weighting the analyses to ensure representative results using newly available longitudinal weights that consistently correct for attrition from the beginning of the survey.This procedure results in data that match up closely with other well-regarded income datasets.(Thus, the first estimates are for 1973—four years after the first year of data, 1969.) The resulting values are technically known as the “transitory variance” of family income, but in what follows, they are also referred to as “family income volatility” and “family income instability.” The estimates are in a form familiar to economists, variance of log income.This brief also reports results from two alternative approaches to measuring family income instability.It concludes, finally, by drawing out the broader implications of this analysis for contemporary efforts to address deepening public concern about economic security.Methods An examination of the instability of a family’s income requires what economists call “longitudinal” or “panel” income data, repeated observations of the income of the same individuals over time (rather than the typical “cross sectional” source of income data, i.e., repeated random surveys of different individuals).In work on male earnings instability, most scholars have followed the seminal contribution of economists Peter Gottschalk and Robert Moffitt in parsing earnings into so-called permanent and transitory components.

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This Briefing Paper updates, improves, and extends these earlier estimates of rising family income instability and discusses potential causes and implications of this trend.

Some of these revised analyses appear in the expanded paperback edition of The remainder of this Briefing Paper is divided into five sections.

First, it lays out the method used and the approach to the major data issues that researchers working in this area must confront.

Family income instability can be calculated using various definitions of income and various measures of instability.

The original analyses in family income, defined as the sum of labor income, asset income, and public and private cash transfers for all members of a family.




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