There are two addendums to the IPUMS data relating to top codes:
The Census Bureau’s 2012 release, which claims to update the CPS with the rank-proximity method from 1976 onwards. I will call this “swap 1” from now on.
The Larrimore et al. release, which claims to update the CPS with the cell-means method, from 1976 onwards. I will call this “swap 2” from now on.
I have downloaded both of these files and “swapped” the values according to the posted instructions. Then I examined the maximum income in each year for all three datasets. Here are the results for the “incwage” variable:
Here, the red line represents the maximum value of “incwage” in the original CPS data, while the swap1 and swap2 data are green and blue respectively.
Note that from 1976 to 1985, the swap1/swap2 values still appear to be topcoded, albeit at a slightly higher level than the original CPS. Then, in 1994, there is a tremendous spike in the max wage, suggesting that there was a change in top coding methodology.
This is inconsistent with the Census’s claim that the swap values from 1976 onwards consistently employ the same methodology (rank-proximity in the case of swap1).
I was wondering if you know anything more about this issue.