Indirect Inference with Importance Sampling: An Application to Women's Wage Growth

Robert Sauer and Christopher Taber ()
Additional contact information
Christopher Taber: University of Wisconsin-Madison

No 11004, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper has two main parts. In the first, we describe a method that smooths the objective function in a general class of indirect inference models. Our smoothing procedure makes use of importance sampling weights in estimation of the auxiliary model on simulated data. The importance sampling weights are constructed from likelihood contributions implied by the structural model. Since this approach does not require transformations of endogenous variables in the structural model, we avoid the potential approximation errors that may arise in other smoothing approaches for indirect inference. We show that our alternative smoothing method yields consistent estimates. The second part of the paper applies the method to estimating the effect of women's fertility on their human capital accumulation. We find that the curvature in the wage profile is determined primarily by curvature in the human capital accumulation function as a function of previous human capital, as opposed to being driven primarily by age. We also find a modest effect of fertility induced nonemployment spells on human capital accumulation. We estimate that the difference in wages among prime age women would be approximately 3% higher if the relationship between fertility and working were eliminated.

Keywords: wage growth; simulation estimation; indirect inference; women (search for similar items in EconPapers)
JEL-codes: C51 J16 (search for similar items in EconPapers)
Pages: 71 pages
Date: 2017-09
New Economics Papers: this item is included in nep-ecm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published as 'Understanding women's wage growth using indirect inference with importance sampling' in: Journal of Applied Econometrics, 2021, 36 (4), 453 - 473

Downloads: (external link)
https://docs.iza.org/dp11004.pdf (application/pdf)

Related works:
Working Paper: Indirect Inference with Importance Sampling: An Application to Women’s Wage Growth (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp11004

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().