*Names in bold indicate Presenter
Our analyses use the 1984, 1996, 2001, 2004, and 2008 panels of the Survey of Income and Program participation (SIPP). The SIPP is uniquely positioned to answer the questions posed in this paper because it is nationally-representative and collects frequent and detailed income information, as well as other information about household characteristics. We examine intra-year income volatility by calculating the coefficient of variation (CV), the standard deviation of income divided by the mean, across the three waves of data collected in each of three years (nine total waves) of a SIPP panel. In addition to total income, we calculate separately the volatility of earned and unearned income. We also disaggregate the findings on changes to CV by separately examining changes in the means and variances of the income measures.
Preliminary results suggest that the gap in income volatility between the poorest and the wealthiest families is widening. From the early 80s to the mid-90s, the gap in levels of income volatility between the lowest and highest income families narrowed. By 2001, however, the gap in income volatility experienced by children in the poorest and wealthiest families had widened considerably – and it currently shows no sign of decreasing. These patterns of income volatility suggest that not only are poor families becoming poorer and rich families becoming richer, but poor families are also more likely to experience unstable income and rich families are less likely to do so. In addition, the increase in volatility for the families in the bottom decile is a function of increasing variability in both earned and unearned income.