http://www.iser.essex.ac.uk/publications/working-papers/iser/2009-14

Official UK income and poverty statistics come mainly from special income surveys, such as the Family Resources Survey (FRS). Information from alternative sources, such as the British Household Panel Survey (BHPS) is also used to complement the picture and describe how the income distribution and poverty status change over time. Such use of survey data however is challenged by the absence of systematic comparisons between BHPS data and other official income data, and therefore by our knowledge about differences or similarities across alternative data sources. This paper is a first step in that direction. It compares the BHPS earnings data with those collected in the FRS, using several earnings measures, which account for various key aspects of the two surveys, and contrasting two different points in time (1995/96 and 2003/04). We find that the 1995/96 comparisons deliver results that are typically closer between the two surveys than the 2003/04 comparisons. The process that seems to drive most of the differences across the two surveys in our comparative work to has to do with the reduced capability of BHPS data to capture characteristics of the current population as the panel becomes older.

This paper compares earnings data from the British Household Panel Survey with those collected in the Family Resources Survey, using several measures, which account for various key aspects of the two surveys, and contrasting two different points in time (1995/96 and 2003/04), allowing us to assess the possible extent of differential attrition in the BHPS data. We first perform non-parametric tests of equality at the centre of the distributions and over the whole earnings distributions. We then apply multivariate regression methods to establish whether the FRS and BHPS earnings data yield different results in relation to three typical uses of earnings data: the probability of being at the bottom or at the top of the earnings distribution, the estimation of earnings functions and, using earnings as an explanatory variable, the probability of belonging to an occupational pension plan. Most of our analyses reveal that the two surveys have fairly similar earnings data in the first comparison year, while sizable differences emerge in the later comparison. This finding is generally robust to the use of alternative earnings definitions and to the type of analysis performed, and thus suggests the important role played by attrition and ‘vintage’ effects. Working Paper 2009-14 2009-04-01 Marco Francesconi Department of Economics, University of Essex mfranc@essex.ac.uk http://www.essex.ac.uk/economics/people/staff/mfranc.asp Holly Sutherland Institute for Social and Economic Research hollys@essex.ac.uk Francesca Zantomio Research Institute for the Evaluation of Public Policies fzanto@essex.ac.uk http://irvapp.fbk.eu/people/zantomio