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Truncation Bias and the Ordinal Evaluation of Income Inequality

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  • Bishop, John A
  • Chiou, Jong-Rong
  • Formby, John P
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    Abstract

    Lorenz dominance analysis is used to examine the effect of top-coding on the ordinal evaluation of U.S. income inequality across time. Current Population Survey microdata are adjusted for truncation bias, and statistical inference procedures are used to examine biennial changes in unadjusted and adjusted Lorenz curves. Beginning in 1985, the truncation bias has a significant effect on ordinal rankings of income inequality.

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    Bibliographic Info

    Article provided by American Statistical Association in its journal Journal of Business and Economic Statistics.

    Volume (Year): 12 (1994)
    Issue (Month): 1 (January)
    Pages: 123-27

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    Handle: RePEc:bes:jnlbes:v:12:y:1994:i:1:p:123-27

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    Cited by:
    1. Richard Burkhauser & Shuaizhang Feng & Stephen Jenkins & Jeff Larrimore, 2008. "Estimating Trends in U.S. Income Inequality Using the Current Population Survey: The Importance of Controlling for Censoring," Working Papers 08-25, Center for Economic Studies, U.S. Census Bureau.
    2. Jenkins, Stephen P. & Burkhauser, Richard V. & Feng, Shuaizhang & Larrimore, Jeff, 2009. "Measuring Inequality Using Censored Data: A Multiple Imputation Approach," IZA Discussion Papers 4011, Institute for the Study of Labor (IZA).
    3. Stephanie Aaronson, 2002. "The rise in lifetime earnings inequality among men," Finance and Economics Discussion Series 2002-21, Board of Governors of the Federal Reserve System (U.S.).
    4. John Bishop & K. Chow & John Formby & Chih-Chin Ho, 1997. "Did Tax Reform Reduce Actual US Progressivity? Evidence from the Taxpayer Compliance Measurement Program," International Tax and Public Finance, Springer, vol. 4(2), pages 177-197, May.
    5. Richard Burkhauser & Shuaizhang Feng & Jeff Larrimore, 2008. "Measuring Labor Earnings Inequality Using Public-Use March Current Population Survey Data: The Value of Including Variances and Cell Means When Imputing Topcoded Values," Working Papers 08-38, Center for Economic Studies, U.S. Census Bureau.
    6. Richard Burkhauser & Shuaizhang Feng & Stephen Jenkins & Jeff Larrimore, 2009. "Recent Trends in Top Income Shares in the USA: Reconciling Estimates from March CPS and IRS Tax Return Data," Working Papers 09-26, Center for Economic Studies, U.S. Census Bureau.
    7. Philip Armour & Richard V. Burkhauser & Jeff Larrimore, 2014. "Using The Pareto Distribution To Improve Estimates Of Topcoded Earnings," Working Papers 14-21, Center for Economic Studies, U.S. Census Bureau.
    8. Zheng, Buhong & J. Cushing, Brian, 2001. "Statistical inference for testing inequality indices with dependent samples," Journal of Econometrics, Elsevier, vol. 101(2), pages 315-335, April.

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