I’m doing an analysis about gender pay gap. But the hourly wages variable in the data set is topcoded. What should I do about it?
Hourly wage data (HOURWAGE) is top-coded by the CPS depending on the usual hours worked (UHRSWORKORG) reported by the respondent. This documentation on Topcoding of Usual Hourly Earnings outlines how top codes are assigned; note that the table at the bottom of the page incorrectly reports a topcode of “None” when they should report “$99.99” (this error will be updated with the next release of IPUMS CPS data).
If your research question requires hourly wage data that is not top-coded, CPS may not be the best dataset to suit your needs. You might try reaching out to the BLS to see if earnings data available through the FSRDC contains non-top-coded data.