Representative versus Actual Lifetime Earnings Trajectories

Published: 2002
Project ID: UM02-C2


This project explores the relationship between real-world lifetime earnings trajectories of actual workers, and several benchmark earnings paths used in Social Security policy analysis. We use the Health and Retirement Study (HRS) to compare actual workers’ covered earnings profiles with so-called representative earnings streams typically used in a wide range of SSA policy simulations. We also explore the effect of using a national average of covered earnings to convert pay earned early in life into “real” earnings compatible with those received later in life. This research will help evaluate distributional impacts of current program rules and policy changes.