PROVIDE Project Technical Paper 2005:1
February 2005
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7. Appendix
7.1. Wage and salary income from labour - data adjustments
Section 2.3.2 compared the LFS 2000:2 and IES 2000 labour income data. This section
describes how the ‘combined’ labour income variable and its related factors and
activities variables were created. The combined variable was subsequently adjusted
(scaled upwards) so that total income from labour in the person-level file
(ieslfsmerge.dta) matches the total income from labour (inclab) in the household-level
file (ies2000h.dta). Although the person- and household-level labour income data did
match originally by construction, some adjustments were made to the household-level
variable inclab in do-file fixing.do. This necessitated the changes, and hence two
person-level variables for income from labour exist, namely inclabp_old and
inclabp_new.44
Initially, when only LFS data was used for the factor-related sub-matrices, there
were various upper and lower outliers that caused total wages within the SAM sub-
matrices to be biased. These outliers in the LFS were also cause for the large
differences in average wages reported in the LFS and the IES. Because of this it was
necessary to investigate the issue further. As a first adjustment it was assumed that if an
44 Either one of these variables may be used to form sub-matrices. It doesn’t make much of a difference
since the patterns of income distribution remain largely the same.
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