IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Earnings bracket obstacles in household surveys – How sharp are the tools in the shed?

  • Dieter von Fintel


    (Department of Economics, Stellenbosch University)

Earnings functions form the basis of numerous labour market analyses. Non-response (particularly among higher earners) may, however, lead to the exclusion of a significant proportion of South Africa’s earnings base. Earnings brackets have been built into surveys to maintain sufficient response rates, but also to capture information from those who are unsure about the earnings of fellow household members. This data type gives a rough indication of where the respondent lies in the income distribution, however exact figures are not available for estimation purposes. To overcome the mixed categorical and point nature of the dependent variable, researchers have traditionally applied midpoints to bracket earnings. Is this method too rudimentary? It is important to establish whether the brackets are too broad in South African Household surveys to be able to make reliable inferences. Here, midpoints are imputed to interval-coded responses alongside theoretical conditional means from the Pareto and lognormal distributions. The interval regression is implemented as a basis case, as it soundly incorporates point and bracket data in its likelihood function. Monte-Carlo simulation evidence suggests that interval regressions are least sensitive to bracket size, however midpoint imputation suffers distortions once brackets are too broad. Coefficient differences are investigated to distinguish similar from different results given the chosen remedy, and to establish whether midpoint imputations are credibly similar to applying interval regressions. To this end, testing procedures require adjustment, with due consideration of the heteroskedasticity introduced by Heckman 2-step estimates. Bootstrapping enhances conclusions, which shows that coefficients are virtually invariant to the proposed methods. Given that the bracket structure of South African Household Surveys has remained largely unchanged, midpoints can be applied without introducing coefficient bias.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: First version, 2006
Download Restriction: no

Paper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 08/2006.

in new window

Date of creation: 2006
Date of revision:
Handle: RePEc:sza:wpaper:wpapers22
Contact details of provider: Postal: Private Bag X1, 7602 Matieland
Phone: 021-8082247
Fax: +27 (0)21-808 2409
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. John K. Dagsvik & Bjørn H. Vatne, 1999. "Is the Distribution of Income Compatible with a Stable Distribution?," Discussion Papers 246, Statistics Norway, Research Department.
  2. Mette Wik & Tewodros Aragie Kebede & Olvar Bergland & Stein Holden, 2004. "On the measurement of risk aversion from experimental data," Applied Economics, Taylor & Francis Journals, vol. 36(21), pages 2443-2451.
  3. Lawrence Dacuycuy, 2005. "Is the earnings-schooling relationship linear? a semiparametric analysis," Economics Bulletin, AccessEcon, vol. 3(37), pages 1-8.
  4. Murray Leibbrandt & Haroon Bhorat, 1999. "Modelling Vulnerability and Low Earnings in the South African Labour Market," Working Papers 99032, University of Cape Town, Development Policy Research Unit.
  5. repec:ebl:ecbull:v:3:y:2005:i:37:p:1-8 is not listed on IDEAS
  6. Doubell Chamberlain & Servaas van der Berg, 2002. "Earnings functions, labour market discrimination and quality of education in South Africa," Working Papers 02/2002, Stellenbosch University, Department of Economics.
  7. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  8. Sandrine Rospabéa, 2002. "How Did Labour Market Racial Discrimination Evolve After The End Of Apartheid?," South African Journal of Economics, Economic Society of South Africa, vol. 70(1), pages 185-217, 03.
  9. Malcolm Keswell & Laura Poswell, 2004. "Returns To Education In South Africa: A Retrospective Sensitivity Analysis Of The Available Evidence," South African Journal of Economics, Economic Society of South Africa, vol. 72(4), pages 834-860, 09.
  10. Reza Daniels & Sandrine Rospabé, 2005. "Estimating an Earnings Function from Coarsened Data by an Interval Censored Regression Procedure," Working Papers 05091, University of Cape Town, Development Policy Research Unit.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:sza:wpaper:wpapers22. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Melt van Schoor)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.