We use the Michigan Panel Data Study on Income Dynamics to decompose the well-known rise in cross-sectional variance of individual male earnings in the U.S. into permanent and transitory components. We find that about half of the increase has arisen from an increase in the variance of permanent...

We estimate the trend in the transitory variance of male earnings in the United States using the Michigan Panel Study of Income Dynamics from 1970 to 2004. Using an error components model and simpler but only approximate methods, we find that the transitory variance started to increase in the...

We decompose the rise in cross-sectional variance of male annual earnings in the United States from 1969 to 1996 into permanent and transitory components. We find that the variance of permanent earnings began rising in the the late 1970s and has continued to rise in the 1980s. The variance of...