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Working Paper Number SEHSD-WP1989-20 or SIPP-WP-83
D. Vaughan
Component ID: #ti1018031686

Introduction

The Survey of Income and Program Participation (SIPP) represents a major effort on the part of the Federal statistical community to improve the quality and comprehensiveness of -information on the economic resources of the household sector and to permit a more accurate portrayal of the impact of government tax and transfer programs on the economic status of the population.

Throughout the postwar period, the Current Population Survey (CPS) has been the major recurring source of information on the economic status of the population. However, by the early 1970's it had become clear that the CPS could not be redesigned to meet the need for better and more comprehensive data on the economic resources of the population while continuing to fulfill its primary role as the source of information on employment and unemployment. The SIPP was developed and tested during the last half of the 1970's in response to this growing need for better information on the economic well-being of the population. Given the substantial commitment of resources to the SIPP program and its charge to produce more comprehensive and better quality data, assessments of the key SIPP statistics on income are quite clearly of some importance.

This paper will not offer a comprehensive and definitive statement on the quality of SIPP income data. Neither the time nor resources available to the author, nor indeed, the state of SIPP data products, would permit making such a statement. However, enough information is available to offer a tentative interpretation of important aspects of the income data available from the- first SIPP panel. Two broad themes will be touched upon. Since it is generally believed that the major technical defect of income surveys is the substantial tendency to under identify the sources and amounts of income received by the population, the issue of the completeness of the SIPP money income estimates will be the central issue. A second important aspect of income data has to do with its suitability for analytic purposes.

With regard to the SIPP, of course, a principal goal is to better represent the role played by government transfers and taxes in determining the overall economic position of individuals and their families. Consequently, some attention will be given to the SIPP's capacity to represent important structural features of the tax and transfer system.

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