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Understanding women's wage growth using indirect inference with importance sampling

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  • Robert M. Sauer
  • Christopher Taber

Abstract

The goal of this work is to investigate the effects of time out of the labor market for childcare on women's lifecycle wage growth. We develop a dynamic lifecycle model of human capital, fertility, and labor supply for women. We estimate by indirect inference using importance sampling and formalize the use of this procedure. The results indicate a modest effect of fertility‐induced non‐employment spells on human capital accumulation. The difference in human capital among prime‐age women would be approximately 2.4% higher at its peak if the relationship between fertility and working were eliminated, and 4.7% higher if the relationship between marriage and fertility was also eliminated.

Suggested Citation

  • Robert M. Sauer & Christopher Taber, 2021. "Understanding women's wage growth using indirect inference with importance sampling," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 36(4), pages 453-473, June.
    • Handle: RePEc:wly:japmet:v:36:y:2021:i:4:p:453-473
    DOI: 10.1002/jae.2818
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