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presentation - VirtualRDC @ Cornell - Cornell University

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Distorting ratios<br />

Ratios are distorted by distorting numerators (magnitudes), but<br />

using undistorted denominators:<br />

ZY ∗<br />

jt =<br />

Y ∗<br />

jt<br />

B(Y ) jt<br />

= δ j<br />

Y jt<br />

B(Y ) jt<br />

,<br />

This method is used for<br />

■ average earnings (ZW k ) and<br />

■ average periods of nonemployment (ZN_) for various groups<br />

August 10, 2005 - p. 12/31

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