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What did you really earn last year?: explaining measurement error in survey income data

Original Citation

Angel, Stefan and Disslbacher, Franziska and Humer, Stefan and Schnetzer, Matthias (2019) What did you really earn last year?: Explaining measurement error in survey income data. INEQ Working Paper Series, 13. WU Vienna University of Economics and Business, Vienna.


This paper analyses the sources of income measurement error in surveys with a unique dataset.We use the Austrian 2008-2011 waves of EU-SILC which provide individual information on wages,pensions and unemployment benefits from survey interviews and officially linked administrativerecords. Thus, we do not have to fall back on complex two-sample matching procedures likerelated studies. We empirically investigate four sources of measurement error, namely (i) socialdesirability, (ii) socio-demographic characteristics of the respondent, (iii) the survey design, and(iv) the presence of learning effects. We find strong evidence for a social desirability bias inincome reporting, while the presence of learning effects is mixed and depends on the income typeunder consideration. An Owen value decomposition reveals that social desirability is a majorexplanation of misreporting in wages and pensions, whereas socio-demographic characteristicsare most relevant for mismatches in unemployment benefits.

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