Title:Analysing Opportunity Cost of Care Work using Mixed Effects Random Forests under Aggregated Census Data

Abstract:Reliable estimators of the spatial distribution of socio-economic indicators are essential for evidence-based policy-making. As sample sizes are small for highly disaggregated domains, the accuracy of the direct estimates is reduced. To overcome this problem small area estimation approaches are promising. In this work we propose a small area methodology using machine learning methods. The semi-parametric framework of mixed effects random forest combines the advantages of random forests (robustness against outliers and implicit model-selection) with the ability to model hierarchical dependencies. Existing random forest-based methods require access to auxiliary information on population-level. We present a methodology that deals with the lack of population micro-data. Our strategy adaptively incorporates aggregated auxiliary information through calibration-weights - based on empirical likelihood - for the estimation of area-level means. In addition to our point estimator, we provide a non-parametric bootstrap estimator measuring its uncertainty. The performance of the proposed point estimator and its uncertainty measure is studied in model-based simulations. Finally, the proposed methodology is applied to the $2011$ Socio-Economic Panel and aggregate census information from the same year to estimate the average opportunity cost of care work for $96$ regional planning regions in Germany.