Does any one have any knowledge/experience with converting/adjusting dollar amounts in earning variables to constant dollars for comparability across several years and use in multivariate analysis? If you do, I will greatly appreciate any help/guidance that you can give me in my current study. Please read below:

Konia T. Kollehlon

Before getting down into the details, let me start with the question for which I am seeking answer: what is/would be the SPSS syntax for converting earnings/income dollar amounts to constant dollars for four time periods, using IPUMS variable CPI99?? Now, let me provide some context/details for this question. In my current study of the integration of the African foreign born into U.S. society, one of the critically important variables that I am using is earnings/income (i.e., Incwage or Incearn) for the four time periods considered in the study. I am using IPUMS data for the years 1980, 1990, 2000, and the 2010 ACS data. I am also using the SPSS (version 17) statistical software for analyzing the data.

Reading more on the description of the earnings/income variables for each of these time periods, I find that “the dollar amounts in the IPUMS are nominal dollars—that is, they are given as measured in the original sample. However, inflation renders these dollar amounts not comparable.” Hence, they have to be converted into constant dollars for comparability across these four years/time periods as well as for multivariate analysis.

The IPUMS variable CPI99, as noted on the IPUMS website, provides the CPI-U multiplier to convert dollar figures to constant 1999 dollars. From the examples given in Table 1. Converting Dollar Amounts to Constant 1999 Dollars With CPI99, the CPI-U multiplier for 1980, 1990, 2000, and 2010 are, respectively, 2.295, 1.344, 1.000, and 0.777.

So far, it sounds quire straight forward and apparently clear. However, since I have never used this multiplier/converter in any of my previous research, I want to make sure that I use it correctly in SPSS. As I understand it so far, one way to use this multiplier in SPSS, would simply be to create a new variable that multiplies the earning/income variable for a given year with its cpi-u multiplier. For example, for 1980, the SPSS syntax would be something like this: COMPUTE IncwageAdj=Incwage*2.295. , where IncwageAdj is the newly created variable, Incwage is the original income variable, and 2.295 is the cpi-u multiplier. Or, for 2010, the SPSS syntax would be: COMPUTE IncearnAdj=Incearn*0.777. If this is correct, I would use similar syntax for the other earnings/income variable (i.e, Total family Income, Annual Personal Income, etc.) that I intend to use in the study.

Please note further that in the multivariate (OLS regression) analysis, I will convert the earnings variables –Incwage, Incearn -- into hourly earnings by dividing Incwage/Incearn by the product of variables UHRSWORK and WKSWORK1, for 1980, 1990, and 2000. And for the four time periods, I will use the [natural] logarithmic form of the earnings/income variables in the multivariate analysis. Sorry if I have been too detailed. Again, if my examples of the SPSS syntax in this e-mail are incorrect, what is/would be the correct SPSS syntax for converting dollar amounts (in earnings/income) to constant dollars for the four years, using the IPUMS variable cp199?? Of course, if there is another simpler way for achieving my goal, that will also be greatly appreciated as well. Thanks in advance for your assistance.