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Estimating trends in US income inequality using the Current Population Survey: the importance of controlling for censoring

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  • Richard Burkhauser
  • Shuaizhang Feng
  • Stephen Jenkins
  • Jeff Larrimore

Abstract

Using internal and public use March Current Population Survey data, we analyze trends in US income inequality (1975–2004). Using a multiple imputation approach where values for censored observations are imputed using draws from a Generalized Beta distribution of the Second Kind, we find that the upward trend in income inequality significantly slowed after 1993. Our results closely match the income share trends reported by Piketty and Saez (2003) except for within the top 1 percent of the distribution. Thus, we argue that if inequality has increased substantially since 1993, such increases are confined to this very high income group.
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  • Richard Burkhauser & Shuaizhang Feng & Stephen Jenkins & Jeff Larrimore, 2011. "Estimating trends in US income inequality using the Current Population Survey: the importance of controlling for censoring," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(3), pages 393-415, September.
    • Handle: RePEc:kap:jecinq:v:9:y:2011:i:3:p:393-415
    DOI: 10.1007/s10888-010-9131-6
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    Keywords

    Censoring; CPS; Time trend; Topcoding; US income inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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