Income

Income

Created Variables

TOTAL NET FAMILY INCOME: These variables provide a composite income figure from a number of income values for household members related to the respondent by blood or marriage.
POVERTY LEVEL: These variables provide the poverty level for the respondent's household and family size based on the federal Poverty Income Guidelines.
POVERTY STATUS: These variables reflect the respondent's household's actual status with respect to the poverty level for his/her family size.

 

Important Information About Using Income Data

Researchers should note that in the survey years from 1979 to 1986, total net family income was created a little differently than from 1987 to present. In the early years when many of the NLSY79 respondents were younger and living in the parental household, the parent was given the Household Interview (Version A). These interviews obtained income from all household members related by blood or marriage. If Version A was used, then the total net family income program picked up income from the Household Interview, and the component income variables from the "Income" section of the questionnaire were ignored.  Usually, if the parent completed the Household Interview, then the youth respondent went through a limited set of income questions that would not allow for the creation of total net family income. If Versions B or C of the Household Interview were given, then the respondent went through the "Income" section and the program picked up the component income variables. Beginning in 1987, the three versions of the Household Interview were reduced to one (Version C) and all respondents go through the "Income" section regardless of whether they are living in the parental household. For more information see the Household Composition section of the guide.

Researchers interested in the income of a respondent's spouse or partner are cautioned that, until 1994, the survey contained separate sets of questions for spouses and partners. This means that researchers who are trying to compute the couple's income need to check answers to both spouse wages and partner wages. After 1994, the CAPI questionnaire combined these sets of questions into one. Hence, users not wanting partner's income data should examine the wording of income source questions carefully. Partner income and earnings are not included in the constructed "Net Family Income" variable.

The NLSY79 cohort is a unique source of income information. Because the original NLSY79 panel contained a supplemental sample of 5,295 economically disadvantaged, nonblack/non-Hispanic youths, researchers are able to precisely measure income of low-income and minority households. Moreover, because in-depth income questions have been asked since 1979, detailed age/income profiles can be traced over time.

Most NLSY79 income questions refer to the previous calendar year. For example, if the survey is being fielded in 1992, most questions ask the respondent to report how much they earned during the 1991 calendar year. A summary of the questions asked in the early surveys is shown in Tables 1 and 2. During each of the first four surveys (1979-82) NLSY79 respondents were examined to see if they met one of following five criteria:

  1. 18 years old or greater
  2. Had a child
  3. Enrolled in college
  4. Married
  5. Living outside their parents' home

If they did not meet any of these five criteria, respondents were asked the simple income section outlined in Table 1. However, if respondents fell into one of these five categories, the interviewer asked a more detailed set of questions outlined in Table 2.

Table 1. Short Form NLSY79 Income Questions: 1979-82

Question 79 80 81 82
Income from Wages, Salary, Tips * * * *
Unemployment Compensation   * * *
Income from Other Sources * * * *
Live in Subsidized Housing? *   * *

Table 2. Long Form NLSY79 Income Questions: 1979-82

Question 79 80 81 82
Military Income * * * *
Wages, Salary, Tips * * * *
Net Business Income * * * *
Net Farm Income * * * *
Unemployment Compensation * * * *
Child Support, Alimony * * * *
AFDC Payments * * * *
Food Stamps * * * *
Supplemental Security Income (SSI) * * * *
Other Welfare     * *
Educational Benefit, Scholarship * * * *
Disability, Veteran Benefits   * * *
Parental, Relative Support * * * *
Other Income (Interest, Dividends, Rent) * * * *
Income Other Household Members * * * *

Beginning in 1983, the NLSY79 questionnaire used the same set of income questions for all respondents, since all respondents would have been at least 18 years old and thus sent through the long series of questions. In this set of questions, all respondents are asked about income from a variety of sources, as shown in Table 3. First, they report how much money they received from working; questions are asked about their military income, wages, salaries, tips, farm income, and business income. Then, respondents provide information about transfers from the government through programs such as unemployment compensation, AFDC (before 1996) and TANF payments, Food Stamps, SSI, and other welfare payments. Respondents are then queried about transfers from nongovernment sources such as child support, alimony, and parental payments. Finally, respondents report income from other sources such as scholarships, V.A. benefits, interest, dividends, and rent.

Table 3. Detailed NLSY79 Income Questions 1983-2014

Question 83-87 88 89-94 96-98 00 02 04-14
Military Income * * * * * * *
Wages, Salary, Tips * * * * * * *
Net Business Income * * * * * * *
Net Farm Income * * * * * * *
Jointly owned farm or business         *   *
Unemployment Compensation * * * * * * *
Child Support, Alimony1 * * * * * * *
Pay Child Support, Alimony * *          
Pay Child Support       * * * *
AFDC Payments * * * * * * *
Food Stamps * * * * * * *
Other Welfare and SSI * * * * * * *
Education Benefit/Grant * * * * * * *
Disability, VA Benefits * * * * * * *
Inheritance, Gifts   * * * * * *
Parent, Relative Support * *          
Other (Interest, Dividends, Rent) * * * * * * *
Income Other HH Members * * * * * * *
Rental Subsidy * * * * * * *
 
1 Income from alimony and child support was collected in a combined question from 1979-1981. These two sources were asked about individually from 1982-1993. Beginning in 1994, child support was collected in individual questions, while alimony was combined with "other regular or periodic sources of income."

Nonresponse

One major concern when asking individuals about their income holdings is nonresponse bias. While it is outside the scope of this section to fully investigate nonresponse bias in the NLSY79, this section briefly describes nonresponse in 1992 as an example. Researchers interested in a fuller discussion of nonresponse should consult the Item Nonresponse section of this guide. There are two primary types of questions on income: general questions asking whether the respondent received income from a particular source and specific questions on the amount of income. Factors that are likely to contribute to nonresponse are suspicion, uncertainty, shared responsibility for family finances, and complex financial arrangements.

Table 4 provides information on response rates to income questions in 1992. The table is divided into three sections. The first section shows the response rates for questions asked about the respondent. The second and third sections show the response rates for the spouse and partner, respectively. The average response rates (99.9 percent) in the receipt column show that almost every NLSY79 respondent will tell the interviewer if they received income from a particular source. Additionally, the amount column, which is calculated based only on individuals who received a particular type of income, also shows high response rates.  Except for alimony payments (54 percent), more than 90 percent of all NLSY79 respondents knew and were willing to divulge how much they earned from various sources.

Table 4. Response Rates to 1992 NLSY79 Questions on Income

  Receipt Amount
Respondent's Income    
  Military Income 99.9 99.4
  Wages/Salaries/Tips -- 97.8
  Business/Farm 99.9 91.9
  Unemployment Benefits 99.9 97.8
  Alimony 99.7 54.0
  Child Support 99.8 96.8
  AFDC 99.9 97.0
  Food Stamps 99.9 97.5
  SSI/Public Assistance 99.9 93.5
  VA Benefits/Disability 99.9 95.8
Spouse's Income    
  Military Income 99.8 95.7
  Wages/Salaries/Tips -- 95.6
  Business/Farm 99.4 85.6
  Unemployment Benefits 99.8 91.9
Partner's Income    
  Military Income 99.5 56.1
  Wages/Salaries/Tips -- 71.8
  Business/Farm 96.7 59.7
  Unemployment Benefits 96.2 --

Examining the sections labeled "Spouse's Income" and "Partner's Income" shows a very different picture. Spouse's income is known with less certainty and partner's income with much less certainty than the respondent's income. For example, 91.9 percent of the respondents reported how much they earned from their own business or farm. However, these same individuals were able to report only 85.6 percent of the earnings of spouses and only 59.7 percent of their partner's income from the same source.

Financial Questions

Financial questions often elicit from respondents either a "refusal" or a "don't know" response. From 1979 to 2000 the NLSY79 interviewers faced with a "refusal" or a "don't know" simply went on to the next question. Starting in 2002 the NLSY79 began handling these cases of item non-response three different ways. Some respondents were asked: 

for a range of values

  • The range of values questions gives respondents a method of providing a lower and upper bound answer. Examining the data suggest that some respondents give quite precise bounds. When a respondent gives a range, researchers should note that the upper and lower bound variables are not always in the correct order. The survey always asks for the upper bound first and the lower bound second. However, if a respondent gives the smaller number first, that number will be typed into the upper bound variable and the range values will be reversed.

if they could provide an answer within $10,000

  • Within $10,000 is designed to tell the respondent that a rough figure is an acceptable answer. Extreme precision is not needed for these answers.

simple above or below questions which bracketed the true value

  • Bracketing lets respondents answer if the amount is above or below a particular value. These initial values are called the variable's entry point. The list of all entry points used by the NLSY79 survey in 2002 and 2004 is found in table 5 and for 2006,2008, 2010, and 2012 in table 6. For example, the entry point for the person's vehicle is $20,000. If the answer to the entry point question is neither a refusal nor a don't know then the respondent is asked one more "is the value above or below question." This results in a series of four brackets that provide researchers with a rough idea the range the item's value falls into. One caution for researchers is that the entry point value is quite low for certain categories. For example, homeowners who do not know the value of their primary residence were asked if it was above or below $20,000. This low entry point value resulted in large number of cases all falling into the same unfolding bracket. An additional caution is that while three of the brackets have a defined range, the top range is open-ended.

Example: An example of how item non-response to financial questions is handled is seen in the questions that ask about income from the military in the 2002 survey. Question Q13-16_TRUNC asks respondents "About how much total income did {spouse name}receive during 2001 from the military before taxes and other deductions?" If the respondent is unable to provide a specific amount the survey in 2002 decides which of the three alternative methods will be used in question Q13-16_EXP.

In question Q13-16_E~000001 some interviewers probe for the answer by asking if they could provide "an approximate range for that amount?" If the respondent can provide a range both the upper and lower number is captured. In question Q13-16_D some interviewers asked "To the nearest $10,000, can you tell me about how much your spouse or partner received during 2001, from the military before taxes and other deductions?"

In question Q13-16_A some interviewers asked "Would it amount to [entry pt military inc] or more?" Looking at Table 5 shows that "entry pt military inc" has the value of either $15,000 or $30,000. This results in the interviewer asking if the income was more or less than these amounts. If the respondent states less than $15,000 or $30,000 they are asked one last question "would it amount to $5,000 or more." If the respondent states more than $15,000 or $30,000 they are asked "would it amount to $40,000 or more."

These questions result in the researcher being able to classify respondents who do not know the military pay received by their spouse into four groups; $0 to $5,000, $5,000 to $15,000/$30,000, $15,000/$30,000 to $40,000 and over $40,000. The specific entry points and symbol names for all income and asset questions used in the bracketing questions are found in Tables 5 and 6.

Table 5. Entry Points for NLSY79 Income and Assets Section in 2002 and 2004

Type Variable Name 40% Amount 60% Amount
Wages and Salary entry pt wage inc $25,000 $35,000
Military Income entry pt military inc $15,000 $30,000
Business Income entry pt business inc $10,000 $20,000
Public Assistance and Welfare entry pt pub assistance inc $5,000 $7,500
Child Support entry pt ch supt inc $2,500 $4,000
Educational Benefits and Scholarships entry pt educ benefits inc $1,500 $3,000
Inheritances and Gifts entry pt inheritance inc $3,000 $10,000
Other Income entry pt other inc $500 $1,000
Earned Income Tax Credit entry pt eitc inc $1,000 $2,000
Other Household Members Income entry pt other hh mems inc $10,000 $20,000

Table 6. Entry Points for NLSY79 Income and Assets Section in 2006 through 2014

Type Variable Name 40% Amount 60% Amount
Wages and Salary symbol_entry_wage $28,000 $40,000
Military Income symbol_entry_mil $14,000 $24,000
Business Income in 2006 symbol_entry_bus $10,000 $20,000
Business Income in 2008 symbol_entry_bus $21,000 $35,000
Public Assistance and Welfare symbol_entry_ asst $5,000 $7,000
Child Support symbol_entry_chsupt $3,000 $4,800
Educational Benefits and Scholarships symbol_entry_ed $1,800 $3,000
Inheritances and Gifts symbol_entry_inher $5,500 $12,500
Other Income symbol_entry_othr $7,200 $13,000
Earned Income Tax Credit symbol_entry_eitc $1,200 $2,000
Other Household Members Income symbol_entry_othhh $7,200 $13,000

Entry Amount Selection

Respondents were randomly assigned to get one of the three methods (unfolding bracket, nearest $10k, range) discussed above when they stated don't know or refused in an income question. Additionally, among respondents who were given unfolding brackets, some respondents are given relatively high starting points (called in some of the codebook pages "the 60 Percent group") or relatively low starting points (called "the 40 percent group"). In 2002, researchers interested in knowing which type of question a respondent was selected to receive should look at question HH_INC_3_EXP, which has the title "Type of question R assigned for household interview income recall experiment."

In later years, like 2008, there is no specific question available that marks if the respondent gets a low or high entry point. Researchers can determine if a respondent is in the low or high group by looking at one of the entry symbols. For example, the public assistance and welfare entry question has the Qname "symbol_entry_asst." Respondents who have a $5,000 value for symbol_entry_asst are part of the low entry amount group, while respondents who have a $7,000 value for this item are part of the high entry amount group (see Table 6).

Table 7. Number of Respondents Assigned to High and Low Entry Amounts

Year R in 40% Group R in 60% Group
2002 3,844 3,878
2004 3,802 3,859
2006 3,851 3,803
2008 3,901 3,853
2010 3,788 3,777
2012 3,662 3,639
2014 3,406  3,370

Top Coding

Because the NLSY79 is a public use data set distributed widely throughout the research and public policy communities, the survey takes extensive measures to protect the confidentiality of respondents. One method of ensuring confidentiality is to "top code" unusually high income values. The NLSY79 top code values were originally designed to prevent identification of the top two percent of respondents.

The NLSY79 has used four top coding algorithms for income: 

  1. From 1979 to 1984, every NLSY79 income question that elicited a response above $75,000 was truncated to $75,001.
  2. From 1985 to 1988, the values were increased to $100,000 and $100,001 respectively. Unfortunately, this algorithm results in a sharp downward bias in the mean value of NLSY79 income holdings since the entire right hand tail is truncated. 
  3. To fix this problem, a new algorithm was introduced beginning in 1989. The new top code algorithm replaced all values above the cutoff with the average of all outlying values.
  4. Beginning in 1996, another new algorithm was used. This algorithm takes the top two percent of respondents with valid values and averages them. That averaged value replaces the values for all cases in the top range. 

Top coding primarily affects seven of the NLSY79 income variables:

  1. the income from respondent's wages
  2. respondent's business
  3. spouse's wages
  4. spouse's business
  5. partner's wages
  6. rest of the family
  7. and other sources such as rents, interest, and dividends

Respondents Living Abroad

Living outside the U.S. does not preclude a respondent from being interviewed. For example, in 1992, 125 respondents lived abroad. Between 1989 and 1992, for people who hold assets denominated in foreign currency, little effort was made to transform these assets into dollar figures. Instead, such values are classified as "invalid skips" in the data. Beginning in 1993, an effort was made to convert these currencies whenever the unit in which the response was made could be determined. While researchers are warned that this occurs, relatively few individuals live outside the U.S.

Risk Preference

In 2010, a set of questions on risk preference was administered that included three questions from 1993, 2002, and 2006 and several new questions adopted from the German Socio-Economic Panel Study. In 2012 and in 2014 the questions were asked only of respondents who were not interviewed in 2010.

Comparison to Other NLS Cohorts: A small amount of income information is gathered for the NLSY79 children. More detailed income information is gathered from young adults and is patterned after the main NLSY79 section. Information on income is regularly collected from the other cohorts. Users should note, however, that the income sources included have varied widely over time and among cohorts. For more precise details about the content of each survey, consult the appropriate cohort's User's Guide using the tabs above for more information.

Survey Instruments and Documentation The income variables are found in the following sections of the questionnaires: Section 11 (1991, 1993), Section 12 (1981, 1987, 1989, 1990, 1992), Section 13 (1983, 1986, 1994-2014), Section 14 (1982, 1985), Section 15 (1984, 1988), Section 17 (1980), and Section 21 (1979).
Areas of Interest Interested users should examine the "Income" area of interest for these variables.