Creator: Kaplan, Greg and Schulhofer-Wohl, Sam Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 731 Abstract:
We use scanner data to estimate inflation rates at the household level. Households' inflation rates are remarkably heterogeneous, with an interquartile range of 6.2 to 9.0 percentage points on an annual basis. Most of the heterogeneity comes not from variation in broadly defined consumption bundles but from variation in prices paid for the same types of goods - a source of variation that previous research has not measured. The entire distribution of household inflation rates shifts in parallel with aggregate inflation. Deviations from aggregate inflation exhibit only slightly negative serial correlation within each household over time, implying that the difference between a household's price level and the aggregate price level is persistent. Together, the large cross-sectional dispersion and low serial correlation of household-level inflation rates mean that almost all of the variability in a household's inflation rate over time comes from variability in household-level prices relative to average prices for the same goods, not from variability in the aggregate inflation rate. We provide a characterization of the stochastic process for household inflation that can be used to calibrate models of household decisions.
Keyword: Heterogeneity and Inflation Subject (JEL): D12 - Consumer Economics: Empirical Analysis, D30 - Distribution: General, and E31 - Price Level; Inflation; Deflation
Creator: Kaplan, Greg and Schulhofer-Wohl, Sam Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 681 Abstract:
We show that much of the recent reported decrease in interstate migration is a statistical artifact. Before 2006, the Census Bureau's imputation procedure for dealing with missing data inflated the estimated interstate migration rate. An undocumented change in the procedure corrected the problem starting in 2006, thus reducing the estimated migration rate. The change in imputation procedures explains 90 percent of the reported decrease in interstate migration between 2005 and 2006, and 42 percent of the decrease between 2000 (the recent high-water mark) and 2010. After we remove the effect of the change in procedures, we find that the annual interstate migration rate follows a smooth downward trend from 1996 to 2010. Contrary to popular belief, the 2007–2009 recession is not associated with any additional decrease in interstate migration relative to trend.
Keyword: Hot deck imputation, Current Population Survey, Item nonresponse, Missing data, Mobility, and Interstate migration Subject (JEL): R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics, C81 - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access, J11 - Demographic Trends, Macroeconomic Effects, and Forecasts, and C83 - Survey Methods; Sampling Methods
Creator: Kaplan, Greg and Schulhofer-Wohl, Sam Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 725 Abstract:
This appendix contains eight sections. Section 1 gives technical details of how we calculate standard errors in the CPS data. Section 2 discusses changes in the ACS procedures before 2005. Section 3 examines demographic and economic patterns in migration over the past two decades, in more detail than in the main paper. Section 4 examines the cross-sectional variance of location-occupation interactions in earnings when we define locations by MSAs instead of states. Section 5 describes alternative methods to estimate the variance of location-occupation interactions in income. Section 6 measures the segregation of industries across states and of occupations and industries across MSAs. Section 7 gives technical details on the use of SIPP and census data to calculate repeat and return migration rates. Section 8 discusses transition dynamics in the model.
Keyword: Gross flows, Information technology, Labor mobility, Interstate migration, and Learning Subject (JEL): D83 - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness, J24 - Human Capital; Skills; Occupational Choice; Labor Productivity, R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics, J11 - Demographic Trends, Macroeconomic Effects, and Forecasts, J61 - Geographic Labor Mobility; Immigrant Workers, and R12 - Size and Spatial Distributions of Regional Economic Activity
Creator: Kaplan, Greg and Schulhofer-Wohl, Sam Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 697 Abstract:
We analyze the secular decline in interstate migration in the United States between 1991 and 2011. Gross flows of people across states are about 10 times larger than net flows, yet have declined by around 50 percent over the past 20 years. We argue that the fall in migration is due to a decline in the geographic specificity of returns to occupations, together with an increase in workers’ ability to learn about other locations before moving there, through information technology and inexpensive travel. These explanations find support in micro data on the distribution of earnings and occupations across space and on rates of repeat migration. Other explanations, including compositional changes, regional changes, and the rise in real incomes, do not fit the data. We develop a model to formalize the geographic-specificity and information mechanisms and show that a calibrated version is consistent with cross-sectional and time-series patterns of migration, occupations, and incomes. Our mechanisms can explain at least one-third and possibly all of the decline in gross migration since 1991.
Keyword: Gross flows, Learning, Labor mobility, Interstate migration, and Information technology Subject (JEL): J61 - Geographic Labor Mobility; Immigrant Workers, J24 - Human Capital; Skills; Occupational Choice; Labor Productivity, R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics, J11 - Demographic Trends, Macroeconomic Effects, and Forecasts, D83 - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness, and R12 - Size and Spatial Distributions of Regional Economic Activity
Creator: Schulhofer-Wohl, Sam and Yang, Yang Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 461 Abstract:
This paper proposes a new way of modeling age, period, and cohort effects that improves substantively and methodologically on the conventional linear model. The linear model suffers from a well-known identification problem: If we assume an outcome of interest depends on the sum of an age effect, a period effect, and a cohort effect, then it is impossible to distinguish these three separate effects because, for any individual, birth year = current year – age. Less well appreciated is that the model also suffers from a conceptual problem: It assumes that the influence of age is the same in all time periods, the influence of present conditions is the same for people of all ages, and cohorts do not change over time. We argue that in many applications, these assumptions fail. We propose a more general model in which age profiles can change over time and period effects can have different influences on people of different ages. Our model defines cohort effects as an accumulation of age-by-period interactions. Although a long-standing literature on theories of social change conceptualizes cohort effects in exactly this way, we are the first to show how to statistically model this more complex form of cohort effects. We show that the additive model is a special case of our model and that, except in special cases, the parameters of the more general model are identified. We apply our model to analyze changes in age-specific mortality rates in Sweden over the past 150 years. Our model fits the data dramatically better than the additive model. The estimates show that the rate of increase of mortality with age among adults became more steep from 1881 to 1941, but since then the rate of increase has been roughly constant. The estimates also allow us to test whether early-life conditions have lasting impacts on mortality, as under the cohort morbidity phenotype hypothesis. The results give limited support to this hypothesis: The impact of early-life conditions lasts for several years but is unlikely to reach all the way to old age.
Keyword: Age-period-cohort identification problem, Mortality, Sweden, Cohort effects, and Cohort morbidity phenotype hypothesis Subject (JEL): I15 - Health and Economic Development, J11 - Demographic Trends, Macroeconomic Effects, and Forecasts, N33 - Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Europe: Pre-1913, and C23 - Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models