clear all set more off set maxvar 10000 *Set path *** *cd ---- specify path to \data_replication\psid\ local procdata "./proc_data" *Define the CPI annual average for each relevant year. *These are defined for the relevant year of the survey (e.g cpi1999 is for 1998) local cpi1999 = 163.01 local cpi2001 = 172.19 local cpi2003 = 179.87 local cpi2005 = 188.91 local cpi2007 = 201.56 local cpi2009 = 215.25 local cpi2011 = 218.09 *Run TAXSIM and compute disposable income forval x=1999(2)2011{ di "YEAR `x'" cd raw_data *Recode the PSID data do FAM`x'ER.do *Construct the variables of interest (income components) do save_data_`x'.do ******************** *Proceed to TAXSIM ******************** *Generate tax year (previous year from the survey year) g year = year_survey - 1 *Convert PSID state codes to TAXSIM state format g state = 0 replace state = 1 if state_residence == 01 /* Alabama */ replace state = 2 if state_residence == 50 /* Alaska */ replace state = 3 if state_residence == 02 /* Arizona */ replace state = 4 if state_residence == 03 /* Arkansas */ replace state = 5 if state_residence == 04 /* California */ replace state = 6 if state_residence == 05 /* Colorado */ replace state = 7 if state_residence == 06 /* Connecticut */ replace state = 8 if state_residence == 07 /* Delaware */ replace state = 9 if state_residence == 08 /* DC */ replace state = 10 if state_residence == 09 /* Florida */ replace state = 11 if state_residence == 10 /* Georgia */ replace state = 12 if state_residence == 51 /* Hawaii */ replace state = 13 if state_residence == 11 /* Idaho */ replace state = 14 if state_residence == 12 /* Illinois */ replace state = 15 if state_residence == 13 /* Indiana */ replace state = 16 if state_residence == 14 /* Iowa */ replace state = 17 if state_residence == 15 /* Kansas */ replace state = 18 if state_residence == 16 /* Kentucky */ replace state = 19 if state_residence == 17 /* Louisiana */ replace state = 20 if state_residence == 18 /* Maine */ replace state = 21 if state_residence == 19 /* Maryland */ replace state = 22 if state_residence == 20 /* Massachusetts */ replace state = 23 if state_residence == 21 /* Michigan */ replace state = 24 if state_residence == 22 /* Minnesota */ replace state = 25 if state_residence == 23 /* Missippi */ replace state = 26 if state_residence == 24 /* Missouri */ replace state = 27 if state_residence == 25 /* Montana */ replace state = 28 if state_residence == 26 /* Nebraska */ replace state = 29 if state_residence == 27 /* Nevada */ replace state = 30 if state_residence == 28 /* NewHampshire */ replace state = 31 if state_residence == 29 /* NewJersey */ replace state = 32 if state_residence == 30 /* NewMexico */ replace state = 33 if state_residence == 31 /* NewYork */ replace state = 34 if state_residence == 32 /* NorthCarolina */ replace state = 35 if state_residence == 33 /* NorthDakota */ replace state = 36 if state_residence == 34 /* Ohio */ replace state = 37 if state_residence == 35 /* Oklahoma */ replace state = 38 if state_residence == 36 /* Oregon */ replace state = 39 if state_residence == 37 /* Pennsylvania */ replace state = 40 if state_residence == 38 /* RhodeIsland */ replace state = 41 if state_residence == 39 /* SouthCarolina */ replace state = 42 if state_residence == 40 /* SouthDakota */ replace state = 43 if state_residence == 41 /* Tennessee */ replace state = 44 if state_residence == 42 /* Texas */ replace state = 45 if state_residence == 43 /* Utah */ replace state = 46 if state_residence == 44 /* Vermont */ replace state = 47 if state_residence == 45 /* Virginia */ replace state = 48 if state_residence == 46 /* Washington */ replace state = 49 if state_residence == 47 /* WestVirginia */ replace state = 50 if state_residence == 48 /* Wisconsin */ replace state = 51 if state_residence == 49 /* Wyoming */ *Marital status: 1 for single, 2 for joint, 3 for head of household. * Making single if never married, widowed, divorced, separated, or other. g mstat = cond(marital_status_head != 1, 1, 2) * Making head of household if unmarried with children. replace mstat = 3 if mstat == 1 & children > 0 *Number of dependents (kids) per tax form. g depx = children *Labor income of primary and secondary taxpayers *Includes: *wages and salaries *+any separate reports of bonuses *+overtime *+tips *+commissions *+professional practice or trade *+market gardening *+additional job income *+and miscellaneous labor income g pwages = labor_inc_head + business_labor_income_head g swages = (labor_inc_wife+business_labor_income_wife)*(mstat==2) *g swages = labor_inc_wife*(mstat==2) // only matters if married *Gross social security benefits *Taxsim will calculate the portion includable in adjusted gross income (AGI) g gssi = socsec_income_hh //together wife and head *Other non-taxable transfer Income such as welfare, workers comp, *veterans benefits and child support that would affect eligibility for state *property tax rebates but would not be taxable at the federal level g transfers = vapension_inc_head + workerscomp_inc_head + tanf_inc_head + /// otherwelfare_inc_head + childsupport_inc_head + transf_rel_head + /// ssi_head+ /// (mstat==2)*(workerscomp_inc_wife + tanf_inc_wife + otherwelfare_inc_wife + /// childsupport_inc_wife + transf_rel_wife + ssi_wife) *(mstat==2)*(workerscomp_inc_wife + tanf_inc_wife + otherwelfare_inc_wife + /// *childsupport_inc_wife + transf_rel_wife + ssi_wife) *Unemployment compensation benefits *Taxsim will calculate the portion included in AGI g ui = unemployment_inc_head + unemployment_inc_wife *g ui = unemployment_inc_head + (mstat==2)*unemployment_inc_wife *Number of dependents under age 17 *Cannot distinguish between children in PSID (asign all children who live in *Family Unit as dependent) g depchild = children *IRA and annuities (benefits and contributions) *g otherprop=pension_ben-pension_contrib *Annuities/IRAs head and wife (benefits) g otherprop=annira_head+pension_wife+business_asset_income_head+business_asset_income_wife *Taxable retirement income g pensions = nonva_retir_head+other_pen_head *Labor income less pension contributions replace pwages = pwages - stat_pen_contrib_head replace swages = swages - stat_pen_contrib_wife *Run taxsim taxsim9, full replace di "TAXSIM FOR YEAR `x' OVER" *Compute total income before tax gen pretax_income = pwages + swages + transfers + gssi + ui + otherprop + pensions *Compute disposable income *Deflate by the CPI (base year 1998) rename fiitax federalTax rename siitax stateTax gen aftertax_income_defl = (pretax_income - federalTax - stateTax)*(`cpi1999' / `cpi`x'') *Drop HH with negative income (stemming from pension contributions that are too high relative to income or from business losses) drop if aftertax_income_defl<0 *Adjust using equivalence scales (OECD) gen nr_adult = size_fam-depchild gen equiv = 1.0 + 0.7*(nr_adult-1) + 0.5*depchild gen aftertax_income_defl_equiv= aftertax_income_defl/equiv *Drop all unnecessary variables keep aftertax_income_defl_equiv age_head year_survey ed_head marital_status_head fam_ID_1968 fam_ID_year size_fam equiv state_residence cd .. save "`procdata'/temp`x'.dta",replace }