The Panel Study of Income Dynamics (PSID) has made more contributions to the study of income volatility than any other dataset in the United States. Its record of research is truly seminal. In this paper we accomplish three tasks. First, we present the reasons that the PSID has made such major contributions to research on the topic. Second, we review the major papers that have used the PSID to study income volatility and we compare their results to those using other datasets. Third, we present new results for male earnings volatility through 2014.I. Why the PSID Has Been So Valuable for Studying Income VolatilityThe reason the PSID was used for the study of income volatility so heavily in the 1970s and 1980s is simply that it was just about the only major panel dataset available to study the topic. Today, there are many others, so the reason the PSID has continued to be used lies elsewhere. One reason is its extraordinary length, stretching from 1967 to the present. A second is its following rules, which follow children of the original sample families through adulthood, allowingthe data to stay representative of the US population aside from immigration. A third is the comprehensiveness of its variable collection on individual and family social and economic characteristics (including hours of work). Fourth, the PSID does have local area identifiers which allow it be used for area-specific analyses and spatial questions.
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