Employment misclassification in survey and administrative reports

•We consider matched survey and administrative reports of employment.•True employment and misclassification rates are identified from these two reports.•Both reports have error, but the administrative data is more accurate.•False positive employment rates are higher than false negative rates.•Misclassification error substantially affects estimated employment rates.

This paper analyses measurement error in the classification of employment using matched survey and administrative data from New Zealand. We show that the true employment rate and time-invariant error rates can be identified, given access to two measures of employment with independent errors. Empirical identification requires data with time varying employment rates over at least two periods. We find that both measures have error, with the administrative data being substantially more accurate than the survey data, and false positives are much more likely than false negatives in both sources. Allowing for errors substantially affects estimated employment rates.