Item nonresponse on income questions in panel surveys: Incidence, imputation and the impact on inequality and mobility

Summary: This paper deals with item nonresponse on income questions in panel surveysand with longitudinal and cross–sectional imputation strategies to cope with thisphenomenon. Using data from the German SOEP, we compare income inequality andmobility indicators based only on truly observed information to those derived from observedand imputed observations. First, we find a positive correlation between inequalityand imputation. Secondly, income mobility appears to be significantly understated usingobserved information only. Finally, longitudinal analyses provide evidence for a positiveinter–temporal correlation between item nonresponse and any kind of subsequent nonresponse.* We are grateful to two anonymous referees and to Jan Goebel for very helpful commentsand suggestions on an earlier draft of this paper. The paper also benefited fromdiscussions with seminar participants at the Workshop on Item Nonresponse and DataQuality in Large Social Surveys, Basel/CH, October 9–11, 2003.