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Measuring inequality using censored data: a multiple‐imputation approach to estimation and inference

Author

Listed:
  • Stephen P. Jenkins
  • Richard V. Burkhauser
  • Shuaizhang Feng
  • Jeff Larrimore

Abstract

To measure income inequality with right-censored (top-coded) data, we propose multiple-imputation methods for estimation and inference. Censored observations are multiply imputed using draws from a flexible parametric model fitted to the censored distribution, yielding a partially synthetic data set from which point and variance estimates can be derived using complete-data methods and appropriate combination formulae. The methods are illustrated using US Current Population Survey data and the generalized beta of the second kind distribution as the imputation model. With Current Population Survey internal data, we find few statistically significant differences in income inequality for pairs of years between 1995 and 2004. We also show that using Current Population Survey public use data with cell mean imputations may lead to incorrect inferences. Multiply-imputed public use data provide an intermediate solution.
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Suggested Citation

  • Stephen P. Jenkins & Richard V. Burkhauser & Shuaizhang Feng & Jeff Larrimore, 2011. "Measuring inequality using censored data: a multiple‐imputation approach to estimation and inference," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 174(1), pages 63-81, January.
  • Handle: RePEc:bla:jorssa:v:174:y:2011:i:1:p:63-81
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    File URL: http://hdl.handle.net/10.1111/j.1467-985X.2010.00655.x
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    Cited by:

    1. Philip Armour & Richard V. Burkhauser & Jeff Larrimore, 2016. "Using The Pareto Distribution To Improve Estimates Of Topcoded Earnings," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1263-1273, April.
    2. Jolliffe,Dean Mitchell & Dang,Hai-Anh H. & Carletto,Calogero & Dang,Hai-Anh H. & Jolliffe,Dean Mitchell & Carletto,Calogero, 2017. "Data gaps, data incomparability, and data imputation : a review of poverty measurement methods for data-scarce environments," Policy Research Working Paper Series 8282, The World Bank.
    3. Conrad Scheibe, 2016. "Fiscal Consolidations and Their Effects on Income Inequality," UCL SSEES Economics and Business working paper series 2016-4, UCL School of Slavonic and East European Studies (SSEES).
    4. Markus P. A. Schneider, 2013. "Race & Gender Differences in the Experience of Earnings Inequality in the US from 1995 to 2010," Working Papers 1303, New School for Social Research, Department of Economics.
    5. Lucio Barabesi & Giancarlo Diana & Pier Perri, 2015. "Gini index estimation in randomized response surveys," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 99(1), pages 45-62, January.
    6. Jonathan D. Fisher & David S. Johnson & Timothy M. Smeeding, 2013. "Measuring the Trends in Inequality of Individuals and Families: Income and Consumption," American Economic Review, American Economic Association, vol. 103(3), pages 184-188, May.
    7. Nora Lustig, 2018. "Measuring the Distribution of Household Income, Consumption and Wealth: State of Play and Measurement Challenges," Working Papers 1801, Tulane University, Department of Economics.
    8. Vladimir Hlasny & Paolo Verme, 2017. "The impact of top incomes biases on the measurement of inequality in the United States," Working Papers 452, ECINEQ, Society for the Study of Economic Inequality.
    9. Philipp Doerrenberg & Denvil Duncan & Clemens Fuest & Andreas Peichl, 2014. "Nice Guys Finish Last: Do Honest Taxpayers Face Higher Tax Rates?," Kyklos, Wiley Blackwell, vol. 67(1), pages 29-53, February.
    10. Dang, Hai-Anh H. & Lanjouw, Peter F. & Serajuddin, Umar, 2014. "Updating poverty estimates at frequent intervals in the absence of consumption data : methods and illustration with reference to a middle-income country," Policy Research Working Paper Series 7043, The World Bank.
    11. repec:oup:oxecpp:v:69:y:2017:i:4:p:939-962. is not listed on IDEAS
    12. Porro Francesco, 2014. "How We Can Evaluate the Inequality in Flint," Stochastics and Quality Control, De Gruyter, vol. 29(2), pages 119-128, December.
    13. Greselin Francesca, 2014. "More Equal and Poorer, or Richer but More Unequal?," Stochastics and Quality Control, De Gruyter, vol. 29(2), pages 99-117, December.
    14. Frank A. Cowell & Philippe Kerm, 2015. "Wealth Inequality: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 671-710, September.

    More about this item

    Keywords

    Censored data ; Current Population Survey ; Generalized beta of the second kind distribution ; Income inequality ; Multiple imputation ; Top coding ;

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • N0 - Economic History - - General

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