Has There Been a Great Risk Shift? Trends in Economic Instability Among Working-Age Adults

A number of researchers—most prominently, political scientist Jacob Hacker— have argued that economic risk has shifted in recent years to workers and families from employers and government. This “great risk shift ” has led to a “new economic insecurity ” that demands new policy responses from government. Hacker’s primary evidence in support of his argument was a chart indicating that family income volatility had risen 200 percent from 1974 to 2002, later revised to 100 percent in response to methodological problems I discovered. These results were the latest in a long line of research on economic instability and inspired a wave of subsequent research. Most of these studies have relied on the Panel Study of Income Dynamics and have reached conclusions that differ from findings based on administrative data. This dissertation finds that when several crucial methodological issues are addressed correctly, the Panel Study of Income Dynamics yields the same conclusions as the research using administrative data. Contrary to the risk-shift hypothesis, male earnings instability and family income instability did not rise much between the earl