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Using the P90/P10 index to measure U.S. inequality trends with current population survey data: a view from inside the census bureau vaults

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The March Current Population Survey (CPS) is the primary data source for estimation of levels and trends in U.S. earnings and income inequality. However, time-inconsistency problems related to top coding lead many CPS users to measure inequality via the ratio of the 90th to the 10th percentile (P90/P10) rather than by more traditional summary measures. With access to public use and restricted-access internal CPS data, and by applying bounding methods, we show that using P90/P10 does not completely obviate time-inconsistency problems, especially in capturing household income inequality trends. Using internal data, we create consistent cell mean values for all top-coded public use values that, when used with public use data, closely track inequality trends in earnings and household income using internal data. But estimates of longer-term inequality trends with these corrected data based on P90/P10 differ from those based on the Gini coefficient. The choice of inequality measure still matters.

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en

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http://eprints.lse.ac.uk/32041/

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