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 weighting multiple years of data but looking only at specific states. For example, if I wanted to pool 3 years of data in New York, Iowa, and Arizona, would I need to weight the estimates? If so, is (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 step?
Finally, I’m assuming in Stata, these are population weights–is this correct?