Improving Information for Social Policy Decisions -- The Uses of Microsimulation Modeling: Volume II, Technical Papers (1991)
Chapter: Income Detail
variability that they are eligible for income support for some months of the year, even though their average monthly income is too high to qualify for benefits.
The income-support program microsimulation models that operate with the CPS must allocate income and employment variables by months across the year. Each of the major models performs this allocation, using methods that are similar in broad outline but differ in many details (see Citro and Ross, in this volume). In recent years, both MATH and TRIM2 have increased the sophistication of their allocation to make income and employment patterns more variable throughout the year. These changes increased the number of units simulated to be eligible for food stamp benefits in the MATH model by 7 percentage points and increased the number of units with earnings simulated to be eligible for AFDC benefits in the TRIM2 model by 13 percentage points in the panel’s validation experiment (although the effect on the total number of simulated eligible units was negligible). It should be noted, however, that the yearly income accounting period in the CPS is not a problem for tax or retirement income models.
The SIPP, in contrast to the CPS, obtains information on employment status and recipiency and amounts for earned and unearned income on a monthly basis, except for asset income, which is ascertained for the 4-month interview period and allocated by the Census Bureau to individual months. In addition to supporting simulation of individual programs (such as AFDC) by using the appropriate accounting period, the SIPP monthly data support analysis of multiple benefit receipt and whether that receipt is serial or simultaneous.
The SIPP longitudinal monthly data also generally support analysis of individual and multiple program dynamics and interactions with other life events, such as employment and marital status changes, over time. One can question whether the 30-month time span of SIPP panels is optimal—many researchers have argued for a longer time span in order to observe responses to events such as loss of a job or parent or spouse over time. A counterargument is that longitudinal surveys such as the PSID, which obtain yearly rather than monthly data for people over long periods of time, may be adequate for such analyses and that a better use for scarce SIPP budget dollars would be to follow a larger sample for a somewhat shorter period in each panel.
Income Detail
Prior to 1980, the March CPS asked for relatively few income amounts. For example, respondents were asked the combined amount received for interest and dividends and for veterans’ compensation, unemployment compensation, and workers’ compensation. In subsequent years, the questionnaire asked about 46 separate sources of unearned income, together with earnings from wage and salary jobs, nonfarm self-employment, and farm self-employment. Yet the processing system was not changed until the March 1989 CPS to provide
