Understanding Women's Wage Growth using Indirect Inference with Importance Sampling

Robert M. Sauer, Christopher Taber

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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.
Original languageEnglish
JournalJournal of Applied Econometrics
Early online date3 May 2021
Publication statusE-pub ahead of print - 3 May 2021

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