Abowd, John M. <br/><br/>
On the Covariance Structure of Earnings and Hours Changes / 
John M. Abowd, David Card. 
 - Cambridge, Mass.  National Bureau of Economic Research  1986. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w1832 .
 - Working Paper Series (National Bureau of Economic Research)  no. w1832. .
<br/><br/> February 1986. 
<br/><br/> This paper presents an empirical analysis of changes in individual earnings and hours over time. Using longitudinal data from three panel surveys,we catalogue the main features of the covariance structure of changes in earnings and hours. We then present an interpretation of these features in terms of both a life-cycle labor supply model and a fixed-wage labor contract model. Our major findings are:(1) there is a remarkable similarity in the covariance structure of earnings and hours changes across the three surveys; and (2) apart from simple measurement error, the major component of variance in earnings and hours affects earnings and hours equi-proportionately. 
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