Extreme Value Top-Coding Truncation Protocol

In Simple Words

Think of calculating the average height of students in a classroom. If a ten-foot giant walks into the room, the average jumps drastically and no longer represents a typical student, so statisticians cap the maximum recorded height to keep the calculated average realistic.

Research question

A small number of exceptionally large recruiting firms can generate massive hiring spikes that severely distort linear treatment effect estimates in randomized trials.

Participants

N = 7,438 establishments in France tracked through administrative database records.

Study Design

Stratified Randomized Controlled Trial applying 99th percentile top-coding truncation to administrative vacancy and hiring metrics.

Results

Capping administrative distributions at the 99th percentile eliminated extreme hiring outliers, ensuring linear treatment effect estimates (+0.047 vacancies, +0.046 hires) reflected representative firm behavior across the sample.

Takeaway

Apply 99th percentile top-coding truncation to administrative labor market outcome variables prior to running linear treatment regressions in randomized trials.

Read alongside the research

Plain-English glossary

Original explanations, informed by the references below. Examples are illustrations, not data from the studies above. The research text stays unchanged.

Randomized controlled trial

A study that uses chance, like drawing lots, to decide who receives each option being compared. Researchers compare the groups’ outcomes to estimate the effect of those options.

ExampleA lottery assigns volunteers to a training programme or a comparison group. Researchers then compare their outcomes.

GET-IT glossary · Randomized study ↗Read more about randomized controlled trial →

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