Misclassification error when identifying job stayers in the Current Population Survey

Abstract

I evaluate the degree of misclassification error when identifying job stayers in the Current Population Survey using the method proposed by Card and Hyslop (1997). I find that even though their method misclassifies approximately one-third of hourly workers, these errors do not substantially impact estimates of downward nominal wage rigidity, a common application. However, I find that misclassification error influences the results in studies that require estimating the share of the population that are job stayers and changers and their wage changes, such as studies of wage adjustment, and develop a correction for it.