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Item Non-response and Imputation of Annual Labor Income in Panel Surveys from a Cross-National Perspective

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  • Joachim R. Frick
  • Markus M. Grabka

Abstract

Using data on annual individual labor income from three representative panel datasets (German SOEP, British BHPS, Australian HILDA) we investigate a) the selectivity of item non-response (INR) and b) the impact of imputation as a prominent post-survey means to cope with this type of measurement error on prototypical analyses (earnings inequality, mobility and wage regressions) in a cross-national setting. Given the considerable variation of INR across surveys as well as the varying degree of selectivity build into the missing process, there is substantive and methodological interest in an improved harmonization of (income) data production as well as of imputation strategies across surveys. All three panels make use of longitudinal information in their respective imputation procedures, however, there are marked differences in the implementation. Firstly, although the probability of INR is quantitatively similar across countries, our empirical investigation identifies cross-country differences with respect to the factors driving INR: survey-related aspects as well as indicators accounting for variability and complexity of labor income composition appear to be relevant. Secondly, longitudinal analyses yield a positive correlation of INR on labor income data over time and provide evidence of INR being a pre-dictor of subsequent unit-non-response, thus supporting the "cooperation continuum" hy-pothesis in all three panels. Thirdly, applying various mobility indicators there is a robust picture about earnings mobility being significantly understated using information from completely observed cases only. Finally, regression results for wage equations based on observed ("complete case analysis") vs. all cases and controlling for imputation status, indicate that individuals with imputed incomes, ceteris paribus, earn significantly above average in SOEP and HILDA, while this relationship is negative using BHPS data. However, once applying the very same imputation procedure used for HILDA and SOEP, namely the "row-and-column-imputation" approach suggested by Little & Su (1989), also to BHPS-data, this result is reversed, i.e., individuals in the BHPS whose income has been imputed earn above average as well. In our view, the reduction in cross-national variation resulting from sensitivity to the choice of imputation approaches underscores the importance of investing more in the improved cross-national harmonization of imputation techniques.

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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 736.

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Length: 36 p.
Date of creation: 2007
Date of revision:
Handle: RePEc:diw:diwwpp:dp736

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Keywords: Item non-response; imputation; income inequality; income mobility; panel data; SOEP; BHPS; HILDA;

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References

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  1. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
  2. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  3. Denise Hawkes & Ian Plewis, 2006. "Modelling non-response in the National Child Development Study," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 169(3), pages 479-491.
  4. Daniel H. Hill & Robert J. Willis, 2001. "Reducing Panel Attrition: A Search for Effective Policy Instruments," Journal of Human Resources, University of Wisconsin Press, vol. 36(3), pages 416-438.
  5. Little, Roderick J A, 1988. "Missing-Data Adjustments in Large Surveys," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(3), pages 287-96, July.
  6. Riphahn, Regina T. & Serfling, Oliver, 2002. "Item Non-Response on Income and Wealth Questions," IZA Discussion Papers 573, Institute for the Study of Labor (IZA).
  7. Cheti Nicoletti & Franco Peracchi, 2006. "The effects of income imputation on microanalyses: evidence from the European Community Household Panel," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 169(3), pages 625-646.
  8. Susanne Rässler & Regina Riphahn, 2006. "Survey item nonresponse and its treatment," AStA Advances in Statistical Analysis, Springer, vol. 90(1), pages 217-232, March.
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Citations

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Cited by:
  1. Landau, Katja & Klasen, Stephan & Zucchini, Walter, 2012. "Measuring Vulnerability to Poverty Using Long-Term Panel Data," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 66057, Verein für Socialpolitik / German Economic Association.
  2. Ute Hanefeld & Jürgen Schupp, 2008. "The First Six Waves of SOEP: The Panel Project in the Years 1983 to 1989," SOEPpapers on Multidisciplinary Panel Data Research 146, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Ziegelmeyer, Michael, 2011. "Illuminate the unknown: Evaluation of imputation procedures based on the SAVE Survey," MEA discussion paper series 11235, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  4. Joachim R. Frick & Markus M. Grabka & Olaf Groh-Samberg, 2012. "Dealing With Incomplete Household Panel Data in Inequality Research," Sociological Methods & Research, , vol. 41(1), pages 89-123, February.
  5. Joachim R. Frick & Kristina Krell, 2010. "Measuring Income in Household Panel Surveys for Germany: A Comparison of EU-SILC and SOEP," SOEPpapers on Multidisciplinary Panel Data Research 265, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. S. Anger & F. Frick & J. Goebel & M. Grabka & O. Groh-Samberg & H. Haas & E. Holst & P. Krause & M. Kroh & H. Lohmann & J. Schupp & I. Sieber & T. Siedler & C. Schmitt & C. K. Spieß & I. Tucci & G. G, 2009. "Developing SOEPsurvey and SOEPservice: The (Near) Future of the German Socio-Economic Panel Study (SOEP)," SOEPpapers on Multidisciplinary Panel Data Research 155, DIW Berlin, The German Socio-Economic Panel (SOEP).
  7. Frick, Joachim R. & Jenkings, Stephen P. & Lillard, Dean R. & Lipps, Oliver & Wooden, Mark, 2007. "The Cross-National Equivalent File (CNEF) and Its Member Country Household Panel Studies," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 627-654.
  8. Carsten Kuchler & Martin Spiess, 2009. "The data quality concept of accuracy in the context of publicly shared data sets," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, vol. 3(1), pages 67-80, June.

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