"Statistical Matching Using Propensity Scores: Theory and Application to the Levy Institute Measure of Economic Wellbeing"

This paper summarizes the background, type, logic, and working procedure of the statistical matching used in the Levy Institute Measure of Economic Wellbeing (LIMEW) project to combine the various data sets used to produce the synthetic data set with which the LIMEW is constructed. We use the match between the 2001 Survey of Consumer Finances and Annual Demographic Survey of Current Population Survey data sets to demonstrate the procedure and results of the matching. Challenges facing the use of this technique, such as the distribution of weights, are discussed in the conclusion.

"Net Government Expenditures and the Economic Well-Being of the Elderly in the United States, 1989-2001"

We examine the economic well-being of the elderly, using the Levy Institute Measure of Economic Well-Being (LIMEW). Compared to the conventional measures of income, the LIMEW is a comprehensive measure that incorporates broader definitions of income from wealth, government expenditures, and taxes. It also includes the value of household production. We find that the elderly are much better off, relative to the nonelderly, according to our broader measure of economic well-being than by conventional income measures. The main reason for the higher relative LIMEW of the elderly is the much higher values of income from wealth and net government expenditures for the elderly than the nonelderly. There are pronounced differences in well-being among the population subgroups within the elderly. The older elderly are worse off than the younger elderly, nonwhites are worse off than whites, and singles are worse off than married couples. We also find that the degree of inequality in the LIMEW is substantially higher among the elderly than among the nonelderly. In contrast, inequality in the most comprehensive measure of income published by the Census Bureau is virtually identical among the elderly and nonelderly. The main factor behind the degree of inequality, as the decomposition analysis reveals, is the greater size and concentration of income from nonhome wealth in the LIMEW compared to extended income (EI).

Cross-Country Variability in Inequality Change

Due to the availability of international and longitudinal data and sophisticated statistical applications, it has been possible to examine cross-country inequality changes from many different angles. In most studies, however, the variability of inequality across countries and years has been taken into account in a limited sense. This paper re-examines the findings of Galbraith and Kum (2005) and makes clear the implications of the assumptions on which the statistical models depend. As a general conclusion, inequality appears closely related to the sectoral share of employment in the overall state of economic development, and this finding appears robust even with various assumptions on cross-country variability in intercept and coefficients of covariates

Imputation Techniques in Microsimulation

Microsimulation has gained attention for its use in analyzing and forecasting the individual impacts of alternative economic and social policy measures. In practice, however, microsimulation cannot be carried out from a single data source, since it requires far more information than any single data source can provide. This paper discusses ways to combine separate data sources when there are no identical key variables, using imputation techniques, to make a large but synthetic data source for microsimulation. A new approach based on propensity score matching is suggested and discussed