Match Bias from Earnings Imputation in the Current Population Survey: The Case of Imperfect Matching

47 Pages Posted: 29 Nov 2005

See all articles by Christopher R. Bollinger

Christopher R. Bollinger

University of Kentucky - Department of Economics

Barry T. Hirsch

Georgia State University; IZA Institute of Labor Economics

Date Written: November 2005

Abstract

This paper examines alternative forms of match bias arising from earnings imputation. Wage equation parameters are estimated based on mixed samples of workers who do and do not report earnings, the latter group being assigned earnings of donors who share some but not all the attributes of the recipients. Regressions that include attributes not used as imputation match criteria (e.g., union status) are severely biased. Related forms of match bias arise with respect to attributes used as match criteria, but matched imperfectly. For example, an imperfect match on schooling creates bias that flattens estimated earnings profiles within low, middle, and high education groups, while creating large jumps in returns across groups. The same pattern arises in wage-age profiles. The paper provides a general analytic expression to correct match bias in regression coefficients under the assumption of conditional mean missing at random. The full sample correction approach is compared to the alternative of omitting imputed earners from the sample, with and without reweighting. Additional problems considered are bias in longitudinal analysis and the presence of dated donors.

Keywords: match bias, imputation, CPS, wage equations, measurement error

JEL Classification: J31, C81, C10

Suggested Citation

Bollinger, Christopher R. and Hirsch, Barry T., Match Bias from Earnings Imputation in the Current Population Survey: The Case of Imperfect Matching (November 2005). IZA Discussion Paper No. 1846, Available at SSRN: https://ssrn.com/abstract=858964

Christopher R. Bollinger

University of Kentucky - Department of Economics ( email )

Lexington, KY 40506
United States

Barry T. Hirsch (Contact Author)

Georgia State University ( email )

Department of Economics
Andrew Young School of Policy Studies
Atlanta, GA 30302-3992
United States
404-413-0880 (Phone)
404-413-0145 (Fax)

HOME PAGE: http://unionstats.gsu.edu/bhirsch

IZA Institute of Labor Economics

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

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