What do we know about income and earnings volatility?

Brewer, Mike, Cominetti, Nye and Jenkins, Stephen P. ORCID: 0000-0002-8305-9774 (2025) What do we know about income and earnings volatility? Review of Income and Wealth, 71 (2). ISSN 0034-6586

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Abstract

We first review research about income and earnings volatility and second provide new UK evidence about the latter using high‐quality administrative record data. The USA stands out as a high‐volatility country relative to the UK and other high‐income countries, but volatility levels have remained constant in these countries recently. Almost all research has considered volatility from an annual perspective whereas we provide new evidence about month‐to‐month earnings volatility. There is a distinct within‐year seasonal pattern to volatility, and volatility is highest for the top and bottom tenths of earners. High earnings volatility among top earners and its seasonality reflect pay bonus patterns whereas, for low earners, the instability of hours including zero‐hours contracts likely plays important roles. Our findings have relevance to the design of cash transfer support in the UK because the monthly reference periods it uses do not align with many earners' pay periods.

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	Social Policy
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor H Social Sciences
JEL classification:	D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions I - Health, Education, and Welfare > I3 - Welfare and Poverty > I31 - General Welfare; Basic Needs; Living Standards; Quality of Life; Happiness J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J38 - Public Policy
Date Deposited:	27 Mar 2025 11:45
Last Modified:	14 Apr 2025 07:18
URI:	http://eprints.lse.ac.uk/id/eprint/127659

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