According to the answer to question “Using EARNWT variable in STATA is resulting in incorrect number of observations”, pooling 12 months of data will created a weighted estimate 12x the size of the population, and the recommendation to create an annualised earnings estimate was therefore to either:
a.) Divide EARNWT by 12, or
b.) Use EARNWT as-is to calculated the weighted estimate for each month and averaging over those 12 months
My question has to do with the recommendation for multiple years of data. For example, if I were to pool 3 years of data, would (b) be the preferred approach, so that I would not have to re-scale EARNWT, since the denominators would differ by year? What would be the recommendation to re-scale EARNWT if I wanted to do everything in one fell swoop. Also, I’m assuming in Stata, these are population weights–is this correct?