OK, I made an error in simulating the IncomeIntel.txt dataset. I just updated that dataset in the repo, and it should be fixed. The new scatterplot should look like the following.
Because these data are not panel data, you cannot use differencing or log differencing methods to detrend them. The solution here is to:
Treat the first year of the data grad_year=2001 equal to the base year.
Divide each salary by (1 + avg_growth_rate) ** (grad_year - 2001). This means that all grad_year=2001 salaries will not change. All grad_year=2003 salaries will be divided by (1 + avg_growth_rate) ** 2. And all grad_year=2013 salaries will be divided by (1 + avg_growth_rate) ** 12.
OK, I made an error in simulating the
Because these data are not panel data, you cannot use differencing or log differencing methods to detrend them. The solution here is to:
IncomeIntel.txt
dataset. I just updated that dataset in the repo, and it should be fixed. The new scatterplot should look like the following.grad_year=2001
equal to the base year.(1 + avg_growth_rate) ** (grad_year - 2001)
. This means that allgrad_year=2001
salaries will not change. Allgrad_year=2003
salaries will be divided by(1 + avg_growth_rate) ** 2
. And allgrad_year=2013
salaries will be divided by(1 + avg_growth_rate) ** 12
.