top coding in income components
sorry to bother during these unfortunate times.
I'm working with UKHLS 1-3 to build a 3-years income average at the individual level.
However, I have some doubts in the income definitions. Specifically, the monthly net income (fimnnet_dv) is the sum of six components. Looking at the section about top-coding, though, only some of these components are effectively top-coded (w_paynu_dv, w_seearnnet_d and w_j2paynet_dv and the w_fiyrinvinc_dv).
The doubt I have is the following: considering that w_fiyrinvinc_dv/12 - i.e. the monthly income from savings and investments is automatically top-coded, I guess the values above the 8,333£ in the w_fimninvnet_dv are due to the other components, right?
For example, in wave 3 the maximum value of 349999.9£ it should derive from other sources than savings and investments (like private pensions, other property rents, etc.).
In this case, is it harmful to top-code the final total monthly income given that not all components are effectively top-coded and there are some very extreme values?
Thanks for your help and support