Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/92041 
Year of Publication: 
2007
Series/Report no.: 
ISER Working Paper Series No. 2007-14
Publisher: 
University of Essex, Institute for Social and Economic Research (ISER), Colchester
Abstract: 
The March Current Population Survey (CPS) is the primary data source for estimation of levels and trends in labor earnings and income inequality in the USA. Time-inconsistency problems related to top coding in theses data have led many researchers to use the ratio of the 90th and 10th percentiles of these distributions (P90/P10) rather than a more traditional summary measure of inequality. With access to public use and restricted-access internal CPS data, and bounding methods, we show that using P90/P10 does not completely obviate time-inconsistency problems, especially for household income inequality trends. Using internal data, we create consistent cell mean values for all top-coded public use values that, when used with public use data, closely track inequality trends in labor earnings and household income using internal data. But estimates of longer-term inequality trends with these corrected data based on P90/P10 differ from those based on the Gini coefficient. The choice of inequality measure matters.
Document Type: 
Working Paper

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