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DEALING WITH EARNINGS BRACKET RESPONSES IN HOUSEHOLD SURVEYS – HOW SHARP ARE MIDPOINT IMPUTATIONS?
Author(s) -
Von Fintel Dieter
Publication year - 2007
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2007.00122.x
Subject(s) - econometrics , earnings , imputation (statistics) , skewness , midpoint , economics , monte carlo method , statistics , mathematics , accounting , missing data , geometry
Abstract 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 built into surveys intend to maintain response rates. Econometric tools to incorporate brackets vary from “simplistic” imputation to interval regressions. Coefficient differences are investigated here to establish reliable remedies. Monte‐Carlo simulations suggest that “simple” methods fail only under extreme skewness and when a substantial number of right‐censored observations appear in the sample. Testing procedures applied to LFS data reveal that in practice coefficients are virtually invariant to the proposed methods.