João Nicolau, Pedro Raposo, Paulo M. M. Rodrigues
arXiv 27 Apr 2020 · Econometrics · publishedEconomic Inquiry (2022) · 2 citations (OpenAlex)
arXiv:2004.12856 · PDF · DOI · OpenAlex · Extracted main text
In this paper we investigate potential changes which may have occurred over the last two decades in the probability mass of the right tail of the wage distribution, through the analysis of the corresponding tail index. In specific, a conditional tail index estimator is introduced which explicitly allows for right tail censoring (top-coding), which is a feature of the widely used current population survey (CPS), as well as of other surveys. Ignoring the top-coding may lead to inconsistent estimates of the tail index and to under or over statements of inequality and of its evolution over time. Thus, having a tail index estimator that explicitly accounts for this sample characteristic is of importance to better understand and compute the tail index dynamics in the censored right tail of the wage distribution. The contribution of this paper is threefold: i) we introduce a conditional tail index estimator that explicitly handles the top-coding problem, and evaluate its finite sample performance and compare it with competing methods; ii) we highlight that the factor values used to adjust the top-coded wage have changed over time and depend on the characteristics of individuals, occupations and industries, and propose suitable values; and iii) we provide an in-depth empirical analysis of the dynamics of the US wage distribution's right tail using the public-use CPS database from 1992 to 2017.
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The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Armour, P., Burkhauser, R. V., and Larrimore, J (2016) Using the $p$areto distribution to improve estimates of top-coded earnings | 1.000 | 7 | 3 | 100% |
| 2 | Autor, D., Katz, L., and Kearney, M (2008) Trends in US wage inequality: Revisioning the revisionists | 1.000 | 6 | 3 | 100% |
| 3 | Wang, H. and Tsai, C.-L (2009) Tail index regression | 0.737 | 3 | 2 | 100% |
| 4 | Autor, D. and Dorn, D (2013) The growth of low-skill service jobs and the polarization of the US labor market | 0.693 | 5 | 1 | 100% |
| 5 | Acemoglu, D. and Autor, D (2011) Skills, tasks and technologies: Implications for employment and earnings, volume 4 of Handbook of Labor Economics, chapter 12, p… | 0.644 | 2 | 2 | 100% |
| 6 | Autor, D. H (2019) Work of the Past, Work of the Future | 0.644 | 2 | 2 | 100% |
| 7 | Goos, M. and Manning, A (2007) Lousy and lovely jobs: The rising polarization of work in Britain | 0.644 | 2 | 2 | 100% |
| 8 | Hill, B (1975) A simple general approach to inference about the tail of a distribution | 0.644 | 2 | 2 | 100% |
| 9 | Katz, L. and Murphy, K (1992) Changes in relative wages, 1963 $-$ 1987: Supply and demand factors | 0.644 | 2 | 2 | 100% |
| 10 | Lemieux, T (2006) Increasing residual wage inequality: Composition effects, noisy data, or rising demand for skill? | 0.644 | 2 | 2 | 100% |
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