Evaluating Dominance Ranking of PSID Incomes by Various Household Attributes
AbstractWe examine the dynamic evolution of incomes, both disposable and gross, for several groups in the PSID panel data at several points from 1968 to 1997. We employ the extended Kolmogorov-Smirnov tests of First and Second Order Stochastic Dominance (SD) as implemented by Maasoumi and Heshmati (2000). They do not impose the Least Favorable Case (LFC) of the composite null hypotheses of SD orders. This is in contrast to simulation and bootstrap-based techniques that do so, resulting in tests that are not asymptotically similar or unbiased. Our approach is also different from the subsampling technique of Linton et al (2005) who obtain critical values for these tests under very general sampling schemes. We offer partial control for many individual/family specific attributes, such as age, gender, education, number of children, work and marital status, by comparing group cells. This avoids having to specify and estimate models of dependence of incomes on these attributes, but lacks the multiple controls that is the promise of such techniques. We find a surprising number of strong rankings, both between groups and over time, in gross income and, to a lesser extent, in 'disposable' incomes.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1727.
Length: 62 pages
Date of creation: Aug 2005
Date of revision:
Publication status: published in: Betti and Lemmi (eds.), Advances in Income Inequality and Concentration Measures, Routledge: London, 2008
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Other versions of this item:
- Maasoumi, Esfandiar & Almas Heshmati, 2003. "Evaluating Dominance Ranking of PSID Incomes by various Household Attributes," Departmental Working Papers 0509, Southern Methodist University, Department of Economics.
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- D33 - Microeconomics - - Distribution - - - Factor Income Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-09-17 (All new papers)
- NEP-EDU-2005-09-17 (Education)
- NEP-LAB-2005-09-17 (Labour Economics)
- NEP-PBE-2005-09-17 (Public Economics)
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