Chapter

Forward Motion

Jagadeesh Gokhale

in Social Security

Published by University of Chicago Press

Published in print April 2010 | ISBN: 9780226300337
Published online February 2013 | e-ISBN: 9780226300368 | DOI: http://dx.doi.org/10.7208/chicago/9780226300368.003.0003
Forward Motion

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This chapter takes the simulation forward in time from 1970 through 2006. This is the “historical simulation.” Constructing the historical simulation involves the incorporation of annual “transition rules” for each of the many population characteristics—race, age, gender, education, and labor force participation. These rules are derived from Panel Survey of Income Dynamics (PSID) microdata during the corresponding years using population weights as appropriate to ensure their representativeness vis-à-vis the U.S. population. The simulated distributions of demographic and economic variables are compared with corresponding distributions from the Current Population Survey (CPS) to ensure that Demographic and Economic Micro Simulation (DEMSIM) accurately captures the momentum of interacting forces embedded in those variables through 2006. Education is a key variable because it enters as a conditional attribute in several other variables. A person's race, gender, age, and prior years of education are important determinants of the likelihood of advancing education by an additional year.

Keywords: forward motion; education; demographic; economic variables; transition; historical simulation

Chapter.  7464 words.  Illustrated.

Subjects: Public Economics

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