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An Overview of the Panel Study of Income Dynamics

 

See also:

  • PSID User Guide
  • Powerpoint slideshow introduction to PSID
    [HTML - Internet Explorer only] [PDF] [Microsoft Powerpoint]
  • Overview
    The Sample
    Data Collection
    Core Content
    Supplements to the PSID
    Special Supplemental Files
    File Structure of the PSID Data
    Data Dissemination and Use
    Key Contributions of the PSID to the Knowledge Base
    New Directions
    References
    Table 1: Core Topics in the PSID
    Table 2 : Other Major Supplemental Topics
    Table 3: Special PSID Supplemental Files







    Overview

    The Panel Study of Income Dynamics (PSID), begun in 1968, is a longitudinal study of a representative sample of U.S. individuals (men, women, and children) and the family units in which they reside. It emphasizes the dynamic aspects of economic and demographic behavior, but its content is broad, including sociological and psychological measures. As a consequence of low attrition rates and the success in following young adults as they form their own families and recontact efforts (of those declining an interview in prior years), the sample size has grown from 4,800 families in 1968 to more than 7,000 families in 2001. At the conclusion of 2003 data collection, the PSID will have collected information about more than 65,000 individuals spanning as much as 36 years of their lives. The study is conducted at the Survey Research Center, Institute for Social Research, University of Michigan and has been made possible through the generous Sponsorship of government agencies, foundations, and other organizations over the years.  Since 1982, the study has had an advisory Board of Overseers, appointed by the NSF to foster input from the national community of scholars, researchers, and policy makers. The study is currently directed by a team of Principal Investigators

    The Sample

    The PSID sample, originating in 1968, consisted of two independent samples:  a cross-sectional national sample and a national sample of low-income families.  The cross-sectional sample was drawn by the Survey Research Center (SRC).  Commonly called the SRC sample, this was an equal probability sample of households from the 48 contiguous states and was designated to yield about 3,000 completed interviews.  The second sample came from the Survey of Economic Opportunity (SEO), conducted by the Bureau of the Census for the Office of Economic Opportunity.  In the mid-1960's, the PSID selected about 2,000 low-income families with heads under the age of sixty from SEO respondents.  The sample, known as the SEO sample, was confined to Standard Metropolitan Statistical Areas (SMSA's) in the North and non-SMSA's in the Southern region.  The PSID core sample combines the SRC and SEO samples.  

    From 1968 to 1996, the PSID interviewed and reinterviewed individuals from families in the core sample every year, whether or not they were living in the same dwelling or with the same people.  Adults have been followed as they have grown older, and children have been observed as they advance through childhood and into adulthood, forming family units of their own.  

    In 1997 a number of changes to the study took place. First, we changed from every year interviewing and redesigned the instrument for biennial data collection. Second, in order to accommodate the study's five-year funding cycle and to keep the study representative of the U.S. population, two major changes were made to the PSID sample:  1) a reduction of the core sample and 2) the introduction of a refresher sample of post 1968 immigrant families and their adult children.

    The original core sample was reduced from nearly 8,500 families in 1996 to approximately 6,168 in 1997. Several scenarios were discussed, but in the end, the Census (SEO) subsample was selected for reduction by two thirds. However, with funding from the National Institute of Child Health and Human Development, the W.T. Grant Foundation, and the Annie E. Casey Foundation, we were able to reinstate some of the dropped families from the nonselected portion of the SEO sample. The families to be reinstated were headed by an African American individual and contained at least one child aged 12 or under in 1996. This subset consists of 609 families that would otherwise have been removed from the study by the core reduction described above.  These families are a separate supplemental sample and do not have weights for national totals of such variables as family income, employment or wealth.  However, for unweighted analytic purposes, these observations can be used.  For more information on the SEO sample, please see "Notes on the SEO or Census Component of the PSID" by Charles Brown.  

    The other major issue in keeping the sample representative had been the changing nature of immigration in the United States since the beginning of the study in 1968.  In 1990, we added 2,000 Latino households, including families originally from Mexico, Puerto Rico, and Cuba.  But while this sample did represent three major groups of immigrants, it missed out on the full range of post-1968 immigrants, Asians in particular.  Because of this crucial shortcoming, and a lack of sufficient funding, the Latino sample was dropped after 1995, and a sample of 441 immigrant families was added in 1997.  These families are included on the files along with the core PSID families.  The sample so refreshed was 6,434 for 1999 and is projected to grow to almost 7,400 in 2005.    

    Data Collection 

    The PSID was collected in face-to-face interviews using paper and pencil questionnaires between 1968 and 1972. Thereafter, the majority of interviews were conducted over the telephone. In 1993, the PSID introduced the use of computer assisted telephone interviewing. In the 1999 wave, 97.5% of the interviews were conducted over the phone, and all interviews were conducted using computer-based instruments.

    Core Content

    The PSID data files provide a wide variety of  information about both families and individuals collected over the span of the study.  The central focus of the data is economic and demographic, with substantial detail on income sources and amounts, employment, family composition changes, and residential location. Content of a more sociological or psychological nature is also included in some waves of the study. Information gathered in the survey applies to the circumstances of the family unit as a whole (e.g., type of housing) or to particular persons in the family unit (e.g., age, earnings). While some information is collected about all individuals in the family unit, the greatest level of detail is ascertained for the primary adults heading the family unit.

    Maintaining the comparability of the data throughout time is crucial for a panel study. Over the years, the general design and content of certain variables have remained largely unchanged. The central focus is to maintain a clean and consistent time series of core content--income sources and amounts, employment, family composition changes, and demographic events--based on the study's annual interviews. See Table 1 for a list of the major core topics. Beginning in 1985, comprehensive retrospective fertility and marriage histories of individuals in the households have been assembled. Other important topics covered by the PSID include housing and food expenditures, housework time, health (recently designed 1999 module), and consumption, wealth, pensions and savings. 

    Supplements to the PSID

    In the early years, respondents were asked about their housing and neighborhood characteristics, child care, achievement motivation, job training, and retirement plans. In more recent years, special topics include extensive supplements on education, military combat experience, health, kinship networks, and wealth (Table 2). A series of health supplements funded by the National Institute on Aging in the early 1990s contain a rich set of questions regarding the health of family members aged 55 and above: general health status, activities of daily living, nursing home stays, home-based care episodes, and major health expenditures. This set of questions, combined with the 1990 RAND Health supplement, provide extensive coverage over a six-year period of the health status of older PSID family unit members. In 1993-1995, the annual Health Care Burden Supplement focused on health care expenditures of the elderly and the extent to which family members spent either time or money taking care of their parents.  Grants from the National Institute on Aging (NIA) have made possible the collection of wealth data for the PSID in 1984, 1989, 1994, and 1999. With sufficient funding, we anticipate collecting data on wealth and active savings in each future wave of the study.

    Another major content expansion was the National Institute of Child Health and Human Development (NICHD)-funded Child Development Supplement (CDS) first fielded in 1997.  This study, which focused on the human capital development of approximately 3,600 children age 0-12 in PSID families, included extensive measures of the children's home environment, family processes, children's time diaries in home and at school, school and day care environment, and measures of their cognitive, emotional and physical functioning.  For details, instruments and related publications, visit the Child Development Supplement Website.  These data will again be collected in 2001-2002.

    Special Supplemental Files

    Several special files, each with detailed information about a particular topic collected over the years, are released separately, either because the size of the files makes them too cumbersome for storage on the study's main files or because of the unique nature of the data. Most of these files are public-release files, but some are restricted files that require analysts to sign a special contract with the University of Michigan to ensure the confidentiality of the PSID respondents. See Table 3 for a listing of such files.
    • The Active Saving File , 1984-1989 and 1989-1994 includes sequences on what is referred to as active saving. These sequences are intended to measure flows of money into and out of different assets such as putting money into or taking it out of the stock market, putting money into annuities or cashing them in.  In combination with changes in the companion wealth components these can be used to study savings versus capital gains.
    • In Estimating Risk Tolerance from the 1996 PSID, employed respondents were asked how willing they are to take jobs with different income prospects and other events. 
    • The 1994-2001 Family 'Income Plus' Files consist of four family files, one for each wave 1994-2001. We omitted Latino families in 1994 and 1995 and also the 441 new immigrant sample families added for 1997. (However, the 1997 Public Release I family file does contain income data for this latter group.) Income measures available include head-wife/"wife" and other family unit members' (OFUMs') taxable incomes, head-wife/"wife" and OFUMs' transfer incomes, total family Social Security income, total family income from all sources, and head's and wife's/"wife's" labor incomes. Components were imputed where initial data were missing. The "plus" variables include the state of residence for each year, and the 1996 file also contains three-digit 1970 Census codes for head's and wife's/"wife's main-job occupation and industry from that wave's report.
    • The 1993 Health Care Burden File contains the detailed information collected in the 1993 PSID interview concerning health events of the elderly and their (primarily financial) burden on immediate and extended families. The file contains one record for each older Head, Wife/"Wife", other family unit member and parent of Head or Wife/"Wife". The purpose of the HCB supplements is to help provide a better understanding about the impact of these events on the families of the elderly. 
    • For each other family unit member (OFUM), the 1993 OFUM Income Detail File contains separate sets of variables for labor income from up to four jobs; two types of asset income, interest and other assets; and the eleven types of transfer income recognized by the PSID. 
    • Historically (prior to the 1993 survey), the hourly wage calculation was accomplished substantially by preprocess editing of paper questionnaires - making case by case judgment easier. With the 1994-2001 Hours of Work and Wage Files, we calculated such variables by extensive programming code and then, ex post, applied judgmental hand editing to the remaining 'problem' cases. 
    • A newly released Wealth File, which includes data from the 1984, 1989, 1994, 1999, 2001 wealth supplements as well as other related information for those years, will permit researchers to ask questions about household saving over each five-year period, 1984-1989, 1989-1994, and 1994-2001. 
    • The 1988 Time and Money Transfers File provides information regarding transfers, in the form of time and money, between a PSID family unit and other persons during the 1987 calendar year. 
    • A series of health supplements between 1990 and 1995 provides information on health status and health expenditures of the elderly and of their parents. The 1990 Self-Administered Health Supplement contains information about health status, health-care coverage, and long-term care coverage of heads and wives aged 50 and above. The 1990 Telephone Health Supplement contains detailed data on health care costs and utilization for heads and wives aged 65 and over. It also has information about health services provided or available to the elderly, such as nursing care, transportation, and meals. The 1991 Parent Health Supplement has extensive data about the health status and health care utilization experience of the parents and parents-in-law of the head of the family. Questions about parents' ability to care for themselves, as well as their housing, income, and assets, were included in this supplement. 
    • The Demographic History Files include the 1985-2001 Childbirth and Adoption History File and the 1985-2001 Marriage History File, which provide details about the event and timing of each childbirth, adoption, and marriage for PSID family members, and the 1985 Ego-Alter File, which provides retrospective data collected in 1985 on substitute-parenting events and usage of public assistance programs. Data on these files are structured in a one-record-per-event format to facilitate event-history analysis, and the information is up-to-date as of the 1997 interviewing wave. The 2001 Parent Identifier File assembles information from the Childbirth and Adoption File, the 1988 Time and Money Transfers File, and other PSID sources about parents of each person ever in the PSID. 
    • The 1968-1985 Relationship File clarifies the crude relationships available on the main PSID file in early years as well as relating all pairs of individuals associated with a given family. Also included on this file are variables showing co-residence status for pairs of individuals for each year from 1968 through 1985. This file identifies the blood, marital, or co-habitational relationships between each pair of individuals who were members of family units that descended from a common, original 1968 family unit. 
    • The Work History Files contain detailed information about employment and unemployment and the timing of those events. 
    • The set of 1968-1980 Retrospective Occupation-Industry Files is comprised of thirteen family-level files, one for each wave, containing three-digit 1970 Census occupation and industry codes for selected PSID Heads and Wives.  The PSID used a one-digit occupation code, and later a two-digit, until 1981 when the three-digit 1970 Census code became standard. The complete history of PSID occupation and industry coding is available through the documentation.
    • The Geocode Match Files contain the identifiers necessary to link the main PSID data to Census data. This linkage allows the addition of data on neighborhood characteristics for the geographic areas in which panel individuals and families reside to the already rich socioeconomic variables collected in the PSID. Although, in the past, we provided selected variables from the Census in aggregated forms (i.e., Census Extract Files), we no longer support these files.  In recent years, there has been a rapid growth of external sources that provide an increasing variety of measures of the social environment.  Rather than investing our resources in duplicating this effort, we are expecting users to seek out these sources to match with the PSID files.  Because the Geocode Match data are highly sensitive (usually pinpointing the census tract in which families lived), this information is available only under special contractual conditions designed to protect the anonymity of respondents.
    • The PSID has gathered substantial amounts of new information about the fact and date of death of many former PSID respondents through 1993 and 1994 efforts to recontact former respondents and through use of the National Death Index of the U.S. Public Health Service. The data are available on the 1968-1999 Death File under special contract. 
    • As part of its 1990 interviewing wave, and in conjunction with an NIA-funded program project directed by Lee Lillard, formerly of the RAND Corporation, and Linda Waite (now at the University of Chicago), PSID staff asked individuals age 55 or older who were living in PSID households and who indicated they were Medicare beneficiaries to sign permission forms for access to Medicare claim records between 1984 and 1990. Those who agreed were asked to renew that permission verbally in 1991 through 1995 for Medicare claims made in those years. When combined with questionnaire information on out-of-pocket medical expenditures and the long time-series of core PSID information, the resulting Medicare Record Data should be quite valuable for a number of studies of the health and well-being of the elderly. It is expected that summary information will be available as a separate file, the Medicare File, to researchers who request it.  Like the Geocode Match Files and the Death File, the Medicare File is made available to researchers under special contract with the University of Michigan.  

    File Structure of the PSID Data

    Before 1990, PSID main files for each interviewing wave consisted of a Cross-Year Family-Individual Response File, a Cross-Year Family-Individual Nonresponse File, and a Cross-Year Family File. Cross-Year Family-Individual Response and Nonresponse files had an identical file structure: one contained records for all individuals who are members of PSID family units interviewed in the most recent interviewing wave, while the other contained information for all individuals who were members of families interviewed in the past but who had attrited in the most recent wave. The Cross-Year Family-Individual File stored both individual-level variables and family-level variables collected in the most current wave and in past waves. The Cross-Year Family File contained only family-level variables.

    Beginning with the 1990 data, the record format of the cross-year files exceeded the maximum allowed on most computing systems, and, consequently, a new file structure for the PSID data was developed. This new file format consists of separate, single-year files with family-level data collected in each wave (i.e., 26 family files for data collected from 1968 through 1993), and one cross-year individual file with individual-level data collected from 1968 to the most recent interviewing wave.

    In this new scheme, each family file contains one record for each family interviewed in the specified year. The records in each file are identified by the Family ID for that year, are sorted by that variable, and contain the family-level variables collected in that year. The cross-year individual file contains one record for each person ever in a PSID family through the current year. The records in the cross-year individual file are identified by 1968 Family ID and Person Number and are sorted by these variables. The file also contains the Family ID of the family with which the person was associated in each year. The cross-year individual file contains all individual-level variables for 1968 through the current year.

    With the new file structure, a moderate amount of data management is required to merge the family files with the individual file to create a traditional PSID cross-year family-individual file. The advantage of this new file format is that the files require the minimum amount of storage space. Since each file is considerably smaller than the traditional cross-year family-individual file, the PSID data in this new file format are less demanding of computing resources. This new file structure also allows users to extract a subsample of individuals or families and the variables of interest to create a substantially smaller file to work with from the beginning of the data analysis process.  Sample SAS and SPSS programs for merging PSID data are available. 

    Data Dissemination and Use

    Our overall system starts with the Computer Assisted Telephone Interviewing application (CATI) going through various stages of processing and then to delivery of the public-use files via the Internet.  To facilitate research with the complex file structure of the PSID, in 1996 we added the PSID Data Center as part of our overall processing system. The Data Center is fully automated and allows for user-specified subsetting criteria when downloading and merging data files.  ASCII or SAS data files can be generated, along with OSIRIS, SAS, SPSS, and Stata data definition statements. The Data Center is the most popular means for obtaining PSID data, and it delivers about 6,500 customized data files to researchers and quantitative social science students each year. The Data Center also provides access to customized HTML and PDF codebooks. HTML-formatted computer-assisted interview documentation, and PDF versions of questionnaires are available at the documentation page.

    In addition to the data center, data and documentation can also be obtained from the PSID Web site in the form of prepackaged files. Main data and documentation files and SAS and SPSS data definition statements are available at the data and documentation page. The packaged data files are in ASCII format. The data center automatically merges your selected files, but example SAS and SPSS programs have been prepared to assist users with creating cross-year analysis files from packaged downloadsSupplemental data files and documentation are also available. 

    The PSID bibliography provides citations of works that use PSID and CDS data. 

    Since the start of the study, the PSID data and documentation have been distributed by the Inter-university Consortium for Political and Social Research

    PSID staff members assist data users with issues concerning the data and questions about analysis through the PSID Help-Desk. If you have questions, please
    contact us

    Key Contributions of the PSID to the Knowledge Base

    The enormous usefulness of longitudinal data from a national sample of families on economic and social issues has made PSID into one of the most widely used social science data sets in the world. Citations studies show that since 1968, more than 2,000 journal articles, books and book chapters, government reports, working papers and dissertations have been based upon the PSID. Over 300 of these are books and book chapters. Articles have appeared in 234 different journals.

    Figure 1 shows how journal articles and dissertations using the PSID data have grown steadily in number. In the last five years alone, there were more than 290 journal articles and 70 Ph.D. dissertations that were based on the PSID. 

     The PSID was founded to study poverty and the effect of the War on Poverty on family economic well-being. At that time it was widely believed that unemployment was the most important reason for poverty and economic distress. Probably the most important finding in the early years, and one that shaped later data collection, was the finding that family structure changes such as divorce were as important to family well-being as unemployment. In particular, it was discovered that the income of women declined nearly 30 percent and their income relative to needs declined by 6.7 percent following divorce, while the income of men declined less and their income relative to needs increased 16.7 percent (Hoffman, 1977; Duncan and Hoffman, 1985). 

    The PSID content has grown ever more comprehensive, making it an invaluable tool for addressing an ever-widening range of important economic and social behavior issues.  We highlight some of the PSID-based research in several areas over the last five years:

    Intergenerational Studies

    The PSID has supported unique contributions to intergenerational research. The long time-series data provide a rare opportunity for researchers to construct family and individual experiences through the life stages, from birth through childhood to early adulthood. In addition to the long-panel, PSID data provide many sibling pairs for researchers to address the long-standing issue of unobserved heterogeneity. Work based on the PSID has emerged in the last few years in major journals in sociology, demography and psychology.  This body of literature helps to understand how early family events, poverty, welfare receipt, and early human capital investment, affect achievements in adulthood - after controlling for a wide range of family and neighborhood characteristics (Haveman et al. 1997, Duncan et al, 1998).  Many of these issues have significant policy implications for the recent welfare reform and the development of new poverty measures (Harris,1996; Hoyne, 1997). These studies illustrate that it is vital to control for both state and individual effects. Panel data allow for the identification of family events, state, and individual effects which neither cross-sectional nor repeated cross-sections can.

    PSID data have been used for some important work on intergenerational transfers. Altonji et al. (1996; 1997) examined theories of parental helping behavior and inter vivos transfers. They found that money transfers tend to reduce inequality in household incomes and that time transfers are only weakly related to income differences. Among parents and in-laws, the richer set of parent is more likely to give money and less likely to receive money. Richer siblings give more to parents and receive less. In contrast to the implications of simple exchange models of transfers, there is little evidence in the cross section or in the analysis using siblings that parental income or wealth raises time transfers from children or that time transfers are exchanged for money transfers. Work along this line includes that of Jayakody (1998), Wilhelm (1996), and Couch et al. (1999). Furstenberg et al. (1995) examined the effects of divorce on intergenerational transfers of money and time and found no evidence that divorced fathers who paid child support are more likely to be involved in intergenerational transfers than those who did not pay child support. These results support a growing body of evidence that marital disruption is altering the organization of kinship in American society. When men relinquish ties to their children during childhood, they rarely resume those ties in later life. Smock and Maning (1997) found that the characteristics of nonresident parents are central to understanding levels of child support

    International Comparisons

    PSID data have also played an increasingly important role in international comparative research. Couch & Dunn (1997) used PSID and German panel data to calculate comparable measures of intergenerational correlation of earnings, hours, and education in the two countries. A remarkable similarity exists across the two countries in the correlation of earnings and of annual work hours of fathers. There is a stronger correlation for daughters and mothers in the U.S. than in Germany, which may be due to the greater labor market integration of women in the U.S. Blau and Kahn (1996) reported a higher level of wage inequality in the U.S. than in nine other OECD countries. They found that the greater overall U.S. wage dispersion primarily reflects the substantially greater compression at the bottom of the wage distribution in the other countries. Duncan et al. (1995b) examined poverty and social-assistance dynamics in North American and European countries. Bjorklund and Jantti (1997) used the PSID to study intergenerational income mobility in Sweden and U.S. To advance basic research on the value and use of panel surveys for international comparative research, PSID, along with other panel surveys, is sponsoring a conference on cross-national research in October 2000.

    Demographic Trends and Behaviors 

    The PSID continues to provide long-term histories of marriage, childbirth and living arrangement data to contribute to the understanding of these demographic trends and their effect on the socioeconomic well-being of families and individuals. Haveman et al. (1997), Corcoran & Kunz, (1997) and Foster et al, (1998) examined the costs and social consequences of teenage pregnancy and premarital childbirth. Blank (1998), Powell & Parcel (1997) and Hill et al. (forthcoming) investigated the living arrangement patterns and the effects of family structure and children’s early adult achievement and women’s early trajectories. Brines & Joyner (1999) attempted to explain what unites cohabiting partners over time. They tested the theory, and found support, that cohabitors are more likely to remain together under conditions of equality by modeling the stability of married and long-term cohabiting unions.

    Many researchers studied the relationship between marriage or marital dissolution and individuals’ earnings and labor supply behavior (Nakosteen & Zimmer 1997; Vanderklauw, 1996), health (Lillard & Waite,1995; Lillard and Panis, 1996), and intra-household resources (Ono, 1998). Moffit et al. (1998) used four data sets, including the PSID to investigate the extent and implications of cohabitation and marriage among U.S. welfare recipients. They found weak evidence in support of the idea that AFDC provided incentives for recipients to cohabit. Whittington and Alm (1997) examined the effect of income taxation on divorce and Gray (1998) examined divorce-law changes, household bargaining, and married women's labor supply. 

    Neighborhood Effects

    Utilizing the neighborhood data that link to the rich family and individual information collected in the PSID, researchers were able to study effects of community on the life course. Scott & Crowder have a series of papers (1998; 1997; 1999) showing the level of neighborhood poverty weakens the relationship between childbirth and marriage for women. Education and marriage increase the likelihood of leaving poor tracts, while age, home ownership, and receiving public assistance reduce it. Residential segregation by race and poverty status and the supply of new housing in the metropolitan areas also influences the likelihood of moving between distressed and nondistressed neighborhood. Foster and McLanahan, (1996) examined whether neighborhood conditions affect a young person's chance of finishing high school.  

    Sucoff & Upchurch (1998) found that compared with living in a racially mixed neighborhood, living in a highly segregated neighborhood is associated with a 50-percent increase in the rate of a premarital first birth, regardless of neighborhood socioeconomic status. Quillian (1999) found that the migration of the nonpoor away from moderately poor neighborhoods has been a key process in forming new high-poverty neighborhoods. He also found that neighborhoods with increasing black populations tend to lose white population rapidly. Harris (1999) examined whether the housing prices are lower in neighborhoods with high concentrations of black residents and, if so, whether this is due to racial discrimination. He found clear evidence that property values do respond to racial composition. However, housing in neighborhoods with a high percentage of black residents is less valuable not because of an aversion to blacks per se, but rather because people prefer affluent, well-educated neighbors, and these traits are more common among whites than blacks.

    Child Development.  With the addition of the 1997 Child Development Supplement, the PSID has begun to contribute to child development literature with current, high-quality data based on a national sample. Recent work includes examination of children's time use (Hofferth and Sandberg, forthcoming), fathers' involvement with children (Yeung et al., forthcoming), and allocation of children's time in schools (Roth et al. 1999). We anticipate more work in this area with new data collected in the planned second-wave supplement in 2001.

    Other important contributions to individual and family well-being over the last decade include:

    Influences of Family History . There are several key findings in the demographic literature that could not have been obtained without longitudinal data following parents and children over a long period of time. These include the finding that parental divorce is bad for kids (e.g., McLanahan and Sandefur, 1994) and teenage childbearing is bad for the young mother (e.g., Hoffman et al., 1993), and that neighborhoods have effects on children's development independent of family characteristics (Brooks-Gunn et al., 1993). Intergenerational transfers and mobility are key issues addressed by the PSID because of its longitudinal nature.

    Long-Term Social Impacts on Health . In the health literature, researchers have found that the social environment of marriage decreases men's and women's risks of mortality, even taking positive selection into marriage into account (Lillard and Waite, 1995). Other work has examined the contribution of employment factors and personal health behaviors on mortality (e.g., Wolfe and Haveman, 1983; Haveman et al., 1994). Physical and environmental hazards lead to deterioration in men's and women's health status, net of other factors, and smoking has been found to be consistently harmful to health.

    Income and Balance Sheet Dynamics. A recent important finding is that, compared with the older generation, the younger generation has experienced a slowdown in the attainment of middle-class status and financial independence from their parents (Duncan et al., 1995a). For example, 42 percent of young men who turned 30 in 1989-1992 had attained middle-class earnings, compared with 60 percent of those who turned 30 in 1977-1988. This decline in upward mobility has been uniform across all demographic groups. In addition, the PSID is now being used to address the puzzle of the low savings rate in the United States.  Recent work based on the PSID Supplemental Wealth Files indicates a high rate of decile wealth mobility (Hurst et al. 1998).  

    Some of the diverse economic and social theories that have recently been--or can now or soon be--developed and tested with PSID data include:

    • Game-theoretic interactions among family members (market work and housework of spouses, control of finances measured as of 1999, separate pensions and intrafamily bargaining);
    • Theories of the impact of technical change on earnings and life-course mobility across occupations and industries;
    • Models of spatial equilibrium and neighborhood effects tested by spatial analysis models using geocode data as input;
    • Models of bequests and altruism tested with savings, wealth and gifts measures;
    • Models of intergenerational mechanisms in social and economic life tested with multigenerational data;
    • Life-course stress and mortality theories tested with long-term health and mortality measures;
    • Theories of social acceptance or ‘stigma’ tested with models used to understand the rise in bankruptcy beyond that predicted by financial gains from declaring bankruptcy under Title 7 or 13;
    • Changes in welfare and incentives for saving by low income families;
    • Long-term effects of economic conditions of the family during early childhood;
    • Family adaptation to change, including immigration to the United States;
    • How labor markets adjust and workers make commitments to large durables (autos) during different stages of the business cycle;
    • How strong the spending stimulus is from the ‘wealth effect’ of stock market gains;
    • Whether the wealth effect, including wealth from pension balances in equities, can explain much of the low U.S. savings rate;
    • Participation of younger and less educated employees in company-sponsored pension plans;
    • Long-term effects of health capital as indexed by healthful activities, nutrition and maintaining proper weight on economic well-being;
    • Models of product space competition—how consumers select among the bewildering array of vehicle types;
    • How income and wealth mobility compare in the United States, Sweden and Germany;
    • What share of total wealth is in the form of pensions and whether it protects the ‘grasshoppers’ (those with hyperbolic discounting) who would otherwise save little for retirement; 
    • Whether Baby Boomers really are bigger spendthrifts than earlier cohorts and if so, whether this is because they expect transfers from their parents;
    • Cross-national comparative research on demographic trends and behavior;
    • Multidisciplinary and life-course research on the roles that the family, school and neighborhood play in fostering or hindering children's learning at home and at school;
    • Social and economic determinants and consequences of caring for elderly parents;
    • Time use studies as indicators of social and economic well-being of children;
    • The effect of early human capital investment on children’s development;
    • Patterns, causes and consequences of union formation behavior; and
    • Family processes as mediators of how socio-economic characteristics, neighborhood and policies affect children’s cognitive, emotional, and physical well-being.

    New Directions

    While many of the uses for which the PSID has become known could not have been anticipated in 1968, today we see that, given the enormous value of the dataset and funding limitations for conducting new studies, the data will become even more widely used in the future.

    Through supplements on intergenerational transfers, health and aging, wealth, and child development, and through its proposed immigrant supplement, in the next few years the PSID will have information of interest to an entire new generation of researchers that will inform policy and theory for the foreseeable future.

    Recently it has become common to hear of the central role of information technology (IT) in the ‘New Economy’. To date much of the evidence of an effect of IT is circumstantial. Many of the trends are newly emerging and the requisite data to capture the changing landscape are outside the range of traditional measurements. As of May 1999, a total of 171 million people worldwide are estimated to have Internet access and 97 million or 57 percent of the total are in Canada or the United States. The U.S. and Canada also have the highest percent of the population with Internet access at home or work (37 and 36 percent, respectively). The Nordic countries have use rates averaging 33 percent while Germany and Japan are at 10 percent.

    Evidence for a role of IT in shaping earnings is available from PSID files through 1997 via the use of data from our ‘Income Plus’ supplemental files, available on the web since the winter of 1999 and updated in April 2000. These files include family income and its components (notably labor earnings of head and spouse), work hours and work weeks, occupation and industry, and annual average hourly earnings. Overall, for those working 1500 hours per year or more, we have found strong earnings growth between the mid-1980s and the mid-1990s. For women, in the middle percentiles, earnings were rising at a rate above the CPI-U. At the 50th percentile, earnings rose 13 percent, from $21,627 to $24,280. Allowing for CPI bias of 1 percent per year, this is in the range of 25 percent per decade. At the upper part of the earnings distribution, the gains net of inflation were much higher still. For the 90th percentile the 1985–1995 gains were 19.5 percent and for the 95th percentile the annual earnings of women working 1500 or more hours rose from $47,887 to $60,648, a gain of 26.6 percent above the CPI. Men’s earnings rose substantially in all but the middle percentiles, 1985–1995.

    Analysis of the annual hourly earnings of men and women shows interesting effects of IT on the earnings of the Baby Boomers [bb], compared to earlier cohorts. Using kernel density estimation, we have the log wage experience profiles for men set out in Figure 2. These are disaggregated into those in IT industries [it] and non-IT industries based on Department of Commerce measures, defined by the shares of capital and workforce which are ‘IT’. To illustrate, depository institutions and pipelines are IT user industries, and telecommunications is both a producer and user of IT. The first notable feature is that the profile for non-IT (‘old economy’) Baby Boom college graduates lies somewhat (about 6 percent) below the profile for non-IT pre-Baby Boom cohorts. This implies that results based on parametric earnings models may fail to convey the within Baby Boom earnings variance for college graduates, a result which suggests that much of the college wage advantage reported in the economics literature is driven by the earnings of a small share of the group. Is this wage gain partly related to information technology?

    Among Baby Boomers with less than college education [hg], the IT advantage is quite small, overall about 7 percent. For Baby Boomers with college education, the IT advantage of younger workers (under 20 years experience) is more on the order of 20 percent. For the older college cohorts the IT advantage (not shown here) is also very small, also under 10 percent for most of the profile. While preliminary, these findings suggest a vintage effect of IT, wherein younger (here, Baby Boomer), male college cohorts were able to gain from a new technology compared to older cohorts. As the earnings history of later cohorts unfolds will they realize a still larger IT advantage? How large are the IT premiums for women? Initial work suggests an IT advantage there, too.

    References

    Altonji, J. G., and Thomas A. Dunn. 1996. Effects of Family Characteristics on the Return to Education. The Review of Economics and Statistics 78, no. Nov.: 692-704.
    Keywords: Earnings/ Education/ Intergenerational Effects

    Altonji, J. G., Fumio Hayashi, and Laurence Kotlikoff. 1997. Parental Altruism and Inter Vivos Transfers: Theory and Evidence. Journal of Political Economy 105, no. 6: 1121-66.
    Keywords: Intergenerational Transfers-Assistance/ Wealth

    Bjorklund, Anders, and Markus Jantti. 1997. Intergenerational Income Mobility in Sweden Compared to the United States. The American Economic Review 87, no. 5: 1009-18.
    Keywords: Earnings/ Intergenerational Effects

    Blank, Susan. 1998. Hearth and Home: The Living Arrangements of Mexican Immigrants and U.S.-Born Mexican Americans. Sociological Forum 13, no. 1: 35-57.
    Keywords: Earnings/ Family Composition/ Housing

    Blau, Francine, and Lawrence Kahn. 1996. Wage Structure and Gender Earnings Differentials: An International Comparison. Economica 63:    S29-S62.
    Keywords: Earnings/ Job Skills/ Women's Studies

    Brines, Julie, and Kara Joyner. 1999. The Ties that Bind: Principles of Cohesion in Cohabitation and Marriage. American Sociological Review 64: 333-55.
    Keywords: Divorce-Separation/ Earnings/ Social Psychology

    Brooks-Gunn, Jeanne, Greg J. Duncan, Pamela K. Klebanov, and Naomi Sealand. 1993. Do Neighborhoods Influence Child and Adolescent Development? American Journal of Sociology 99, no. 2: 353-95.
    Keywords: Geographic Location-Mobility/ Racial-Ethnic Differences/ Social Psychology/ Child Development

    Corcoran, Mary, and James P. Kunz. 1997. Do Unmarried Births Among African-American Teens Lead to Adult Poverty? Social Service Review (June):    274-87.
    Keywords: Fertility/ Marriage/ Poverty/ Racial-Ethnic Differences

    Couch, Kenneth A., Mary C. Daly, and Douglas A. Wolf. 1999. Time? Money? Both? The Allocation of Resources to Older Parents. Demography 36, no. 2: 219-32.
    Keywords: Earnings/ Intergenerational Effects/ Intergenerational Transfers-Assistance

    Couch, Kenneth, and Thomas A. Dunn. 1997. Intergenerational Correlations in Labor Market Status. The Journal of Human Resources 32, no. 1: 210-232.
    Keywords: Earnings/ Education/ Intergenerational Effects/ Labor Supply

    Duncan, Greg J., Johanne Boisjoly, and Timothy Smeeding. 1995a. Slow Motion: Economic Mobility of Young Workers in the 1970s and 1980s. Working Paper 95-18. Evanston, IL: Northwestern University.

    Duncan, Greg J., Bjorn Gustafsson, Richard Hauser, Gunther Schmaus, Stephen Jenkins, Hans Messinger, Ruud Muffels, Brian Nolan, Jean-Claude Ray, and Wolfgang Voges. 1995b. Poverty and Social-Assistance Dynamics in the United States, Canada, and Western Europe .  Poverty, Inequality, and the Future of Social Policy: Western States in the New World Order . editor Katherine McFate. New York, NY: Russell Sage.
    Keywords: Family Composition/ Government Transfers/ Poverty/ Work Experience

    Duncan, Greg J., and Saul D. Hoffman (1985). "A Reconsideration of the Economic Consequences of Divorce." Demography 22:485-497.  Keywords:  Divorce-Separation/Family-Household Income/Racial-Ethnic Differences/Women's Studies

    Duncan, Greg J., Wei-Jun J. Yeung, Jeanne Brooks-Gunn, and Judith Smith. 1998. How Much Does Childhood Poverty Affect the Life Chances of Children? American Sociological Review 63, no. 3: 406-23.
    Keywords: Education/ Family Composition/ Intergenerational Effects/ Poverty

    Foster, E. Michael, Damon Jones, and Saul Hoffman. 1998. The Economic Impact of Nonmarital Childbearing: How Are Older, Single Mothers Faring? Journal of Marriage and the Family 60, no. 1: 163-74.
    Keywords: Earnings/ Fertility/ Marriage

    Foster, E. Michael, and Sara McLanahan. 1996. An Illustration of the Use of Instrumental Variables:  Do Neighborhood Conditions Affect a Young Person's Chance of Finishing High School? Psychological Methods 1, no. 3: 249-60.
    Keywords: Education/ Social Psychology/ Statistical Methods

    Furstenberg, Jr. Frank F., Saul Hoffman, and Laura Shrestha. 1995. The Effect of Divorce on Intergenerational Transfers: New Evidence. Demography 32, no. 3: 319-33.
    Keywords: Child Support/ Divorce-Separation/ Intergenerational Transfers-Assistance

    Gray, Jeffrey S. 1998. Divorce-Law Changes, Household Bargaining, and Married Women's Labor Supply. The American Economic Review 88, no. 3: 628-42.
    Keywords: Divorce-Separation/ Labor Supply/ Women's Studies

    Harris, David R. 1999. Property Values Drop When Blacks Move in, because...": Racial and Socioeconomic Determinants of Neighborhood Desirability. American Sociological Review 64: 461-79.
    Keywords: Geographic Location-Mobility/ Housing/ Racial-Ethnic Differences/ Social Psychology

    Harris, Kathleen M. 1996. Life After Welfare:  Women, Work and Repeat Dependency. American Sociological Review 61, no. 3: 407-26.
    Keywords: AFDC/ Child Care/ Family-Household Income/ Women's Studies

    Haveman, Robert, Barbara Wolfe, Brent Kreider, and Mark Stone. 1994. "Market Work, Wages, and Men's Health." Journal of Health Economics 13:163-182.
    Keywords: Earnings/Health/Labor Supply

    Haveman, Robert, Barbara Wolfe, and Kathryn Wilson. 1997. Childhood Poverty and Adolescent Schooling and Fertility Outcomes:  Reduced-Form and Structural Estimates.  Consequences of Growing Up Poor. Eds. Greg J. Duncan, and Jeanne Brooks-Gunn, 419-60. New York:  Russell Sage Foundation. 
    Keywords: / Education/Family-Household Income/ Fertility/ Poverty

    Hill, Martha S., Wei-Jun Yeung, and Greg J. Duncan. Forthcoming. The Effect of Family Structure on Children's Economic and Behavior Outcome. Journal of Population Economics.

    Hofferth, Sandra L., and John F. Sandberg. forthcoming. "How American Children use their Time." Journal of Marriage and the Family.

    Hoffman, Saul D. 1977. "Marital Instability and the Economic Status of Women." Demography 14:67-76. 
     Keywords:  Divorce-Separation/Family-Household Income/Women's Studies

    Hoffman, Saul D., E. Michael Foster, and Frank F. Furstenberg, Jr. 1993. "Re-evaluating the Costs of Teenage Childbearing." Demography 30:1-13.
    Keywords: Fertility/Intergenerational Effects

    Hoyne, Hilary. 1997. Does Welfare Play Any Role in Female Headship Decisions? Journal of Public Economics 65, no. 2: 89-117.
    Keywords: Geographic Location-Mobility/ Government Transfers/ Women's Studies

    Hurst, Erik, Ming Ching Luoh, and Frank Stafford. 1998. The Wealth Dynamics of American Families, 1984-94. Brookings Papers on Economic Activity 1: 267-337.
    Keywords: Family-Household Income/ Intergenerational Effects/ Racial-Ethnic Differences/ Wealth

    Jayakody, Rukmalie. 1998. Race Differences in Intergenerational Financial Assistance. Journal of Family Issues 19, no. 5: 508-33.
    Keywords: Family Composition/ Intergenerational Transfers-Assistance/ Racial-Ethnic Differences

    Lillard, Lee, and Constantijn W. A. Panis. 1996. Marital Status and Mortality:  The Role of Health. Demography 33, no. 3: 313-27.
    Keywords: Education/ Geographic Location-Mobility/ Racial-Ethnic Differences/ Health/ Marriage

    Lillard, Lee A., and Linda J. Waite. 1995. "Til Death Do Us Part: Marital Disruption and Mortality." American Journal of Sociology 100:1131-1156.
    Keywords: Divorce-Separation/Health/Marriage/Widowhood

    McLanahan, Sara, and Gary Sandefur. 1994. Growing Up With a Single Parent: What Hurts, What Helps. Cambridge, MA: Harvard University Press.
    Keywords: Family Composition/Intergenerational Effects/Women's Studies

    Moffitt, Robert, Robert Reville, and Anne E. Winkler. 1998. Beyond Single Mothers: Cohabitation and Marriage in the AFDC Program. Demography 35, no. 3: 259-78.
    Keywords: AFDC/ Marriage/ Women's Studies

    Nakosteen, Robert, and Michael Zimmer. 1997. Men, Money, and Marriage:   Are High Earners More Prone than Low Earners to Marry? Social Science Quarterly 78, no. 1: 66-82.
    Keywords: Earnings/ Marriage

    Ono, Hiromi. 1998. Husbands' and Wives' Resources and Marital Dissolution.  Journal of Marriage and the Family 60, no. 3: 674-89.
    Keywords: Divorce-Separation/ Earnings/ Marriage

    Powell, Mary Ann, and Toby L. Parcel. 1997. Effects of Family Structure on the Earnings Attainment Process:  Differences by Gender. Journal of Marriage and the Family 59, no. 2: 419-33.
    Keywords: Family Composition/ Family-Household Income/ Women's Studies

    Quillian, Lincoln. 1999. Migration Patterns and the Growth of High-Poverty Neighborhoods, 1970-1990. American Journal of Sociology 105, no. 1: 1-37.
    Keywords: Geographic Location-Mobility/ Poverty/ Racial-Ethnic Differences 

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    Smock, Pamela J., and Wendy D. Manning. 1997. Nonresident Parents' Characteristics and Child Support. Journal of Marriage and the Family 59, no. 4: 798-808.
    Keywords: Child Support/ Survey Methodology

    South, Scott J., and Kyle D. Crowder. 1997. Escaping Distressed Neighborhoods:  Individual, Community and Metropolitan Influences. American Journal of Sociology 103, no. 1: 1040-1084.
    Keywords: Geographic Location-Mobility/ Poverty/ Racial-Ethnic Differences

    ———. 1998. Leaving the 'Hood: Residential Mobility Between Black, White, and Integrated Neighborhoods. American Sociological Review 63, no. 1: 17-26.
    Keywords: Geographic Location-Mobility/ Housing/ Racial-Ethnic Differences

    ———. 1999. Neighborhood Effects on Family Formation:  Concentrated Poverty and Beyond. American Sociological Review 64: 113-32.
    Keywords: Fertility/ Poverty/ Racial-Ethnic Differences

    ———. 1997. Residential Mobility Between Cities and Suburbs: Race, Suburbanization, and Back-to-the-City Moves. Demography 34, no. 4: 525-38.
    Keywords: Geographic Location-Mobility/ Housing/ Racial-Ethnic Differences

    Sucoff, Clea A., and Dawn M. Upchurch. 1998. Neighborhood Context and the Risk of Childbearing Among Metropolitan-Area Black Adolescents. American Sociological Review 63, no. 4: 571-85.
    Keywords: Fertility/ Housing/ Racial-Ethnic Differences

    Vanderklauw, Wilbert. 1996. Female Labor Supply and Marital Status Decisions:  A Life-Cycle Model. Review of Economic Studies 63, no. 2: 199-235.
    Keywords: Labor Supply/ Marriage/ Women's Studies

    Whittington, Leslie, and James Alm. 1997. 'Til Death or Taxes Do Us Part:   The Effect of Income Taxation on Divorce. The Journal of Human Resources 32, no. 2: 388-412.
    Keywords: Divorce-Separation/ Earnings/ Taxes

    Wilhelm, Mark. 1996. Bequest Behavior and the Effect of Heirs' Earnings:   Testing the Altruistic Model of Bequests. The American Economic Review 86, no. 4: 874-92.
    Keywords: Earnings/ Intergenerational Transfers-Assistance/ Family Composition

    Wolfe, Barbara, and Robert Haveman. 1983. "Time Allocation, Market Work, and Changes in Female Health." American Economic Review 73:134-140.
    Keywords: Health/Labor Supply/Women's Studies

    Yeung, W. J., Sandberg, J., Davis-Kean, P., & Hofferth, S. Forthcoming. Children's Time-use with Fathers in Two-Parent Families. Journal of Marriage and the Family.


    Table 1: Core Topics in the PSID

    • Income sources and amounts
    • Poverty status
    • Public assistance in the form of food or housing
    • Other financial matters (e.g., taxes, inter-household transfers)
    • Family structure and demographic measures (e.g., marital events; birth and adoptions; children forming households)
    • Labor market work (e.g., employment status, work/unemployment/vacation/sick time; occupation, industry; work experience)
    • Housework time
    • Housing (e.g., own/rent, house value/rent payment, size)
    • Geographic mobility (e.g., when and why moved; where Head grew up; all states Head has lived in)
    • Socio-economic background (e.g., education, ethnicity, religion, military service; parents' education, occupation, poverty status)
    • Health (e.g., general health status; disability; 30-day emotional distress)

    Table 2 : Other Major Supplemental Topics

    • Housing and neighborhood characteristics (1968-1972, 1977-1987) 

    • Achievement motivation (1972) 

    • Estimating risk tolerance (1996)

    • Child care (1977), child support and child development (1997,2002) 

    • Job training and job acquisition (1978) 

    • Retirement plans (1981-1983) 

    • Health--health status, health expenditures, health care of the elderly and parent's health (1986, 1990, 1991, 1993-1995, 1999-2003) 

    • Kinship--financial situation of parents, time and money help to and from parents (1980, 1988) 

    • Wealth--assets, savings, pension plans, fringe benefits (1984, 1989, 1994, 1999-2003) 

    • Education--grade failure, private/public school, extracurricular activities, school detention, special education, Head Start Programs, criminal offense (1995) 

    • Military combat experience (1994) 

    • Risk tolerance (1996)

    • Immigration history (1997)

    • Time use (1997, 2002)

    • Philanthropic Giving (2001-2003)


    Table 3: Special PSID Supplemental Files

     

    File Name Public

    Release

    File 

    Available 
    Through

    ICPSR

    Via

    Internet

    Active Saving File, 1984-1989 and 1989-1994 Yes No Yes
    Childbirth and Adoption History File, 1985-2001 Yes  No Yes
    Death File, 1968-1999 No No No
    Ego-Alter File, 1985 Yes  Yes  No
    Estimating Risk Tolerance for the 1996 PSID Yes No Yes
    Family 'Income Plus' Files, 1994-2001 Yes No Yes
    Geocode Match File No  No  No 
    Health Care Burden File, 1993 Yes No Yes
    Hours of Work and Wage Files, 1994-2001 Yes No Yes
    Marriage History File, 1985-2001 Yes  No Yes
    Medicare File No No No
    OFUM Income Detail File, 1993 Yes No Yes
    Parent Health Supplement, 1991  Yes  Yes Yes
    Parent Identifier File, 1968-2001 Yes No Yes
    Relationship File, 1968- 1985 Yes  Yes  Yes
    Retrospective Occupation-Industry Files, 1968-1980 Yes No Yes
    Self-Administered Health Supplement, 1990  Yes  Yes  Yes
    Telephone Health Supplement, 1990  Yes Yes  Yes
    Time and Money Transfers File, 1988 Yes  Yes Yes
    Wealth File, 1984, 1989, 1994, 1999, 2001 Yes Yes Yes
    Work-History File, 1984-1985; 1984-1986; 1984-1987 Yes  Yes  No
 




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