Using the P90/P10 Index to Measure U.S. Inequality Trends with Current Population Survey Data: A View from Inside the Census Bureau Vaults

20 Pages Posted: 27 Apr 2009

See all articles by Richard V. Burkhauser

Richard V. Burkhauser

Cornell University - Department of Policy Analysis & Management (PAM); University of Melbourne, Melbourne Institute

Shuaizhang Feng

Shanghai University of Finance and Economics - Department of Economics; Princeton University; IZA Institute of Labor Economics

Stephen P. Jenkins

London School of Economics & Political Science (LSE) - Department of Social Policy and Administration; Institute for the Study of Labor (IZA); University of Essex - Institute for Social and Economic Research (ISER)

Abstract

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.

Suggested Citation

Burkhauser, Richard V. and Feng, Shuaizhang and Jenkins, Stephen P., Using the P90/P10 Index to Measure U.S. Inequality Trends with Current Population Survey Data: A View from Inside the Census Bureau Vaults. Review of Income and Wealth, Vol. 55, Issue 1, pp. 166-185, March 2009, Available at SSRN: https://ssrn.com/abstract=1381801 or http://dx.doi.org/10.1111/j.1475-4991.2008.00305.x

Richard V. Burkhauser (Contact Author)

Cornell University - Department of Policy Analysis & Management (PAM) ( email )

120 Martha Van Rensselaer Hall
Ithaca, NY 14853
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University of Melbourne, Melbourne Institute ( email )

Level 5, FBE Building, 111 Barry Street
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Shuaizhang Feng

Shanghai University of Finance and Economics - Department of Economics ( email )

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Shanghai, AK Shanghai 200433
China

Princeton University

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United States

IZA Institute of Labor Economics

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Germany

Stephen P. Jenkins

London School of Economics & Political Science (LSE) - Department of Social Policy and Administration ( email )

Houghton Street
London, England WC2A 2AE
United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

University of Essex - Institute for Social and Economic Research (ISER) ( email )

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United Kingdom
+44 120 687 3374 (Phone)
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