In Simple Words
Imagine trying to map the unseen internal gears of a complex clock. Instead of opening it, you run experiments—shaking it at different speeds and measuring how the hands move. Then, you build a computer model of clock gears and adjust the virtual gears until the computer clock behaves identical to the real clock across all physical tests.
Research question
Estimating general equilibrium search models directly via maximum likelihood is often intractable due to unobserved heterogeneity, complex dynamic interactions, and multi-stage empirical experimental designs.
Participants
Administrative baseline and post-treatment tracking data of N = 40,403 Danish workers combined with 14-county aggregate vacancy series.
Study Design
Auxiliary statistical models (reduced-form hazard models and difference-in-differences regressions) are estimated on both empirical experimental data and simulated model data to minimize the distance vector between empirical and simulated parameter estimates.
Results
The structural parameters matched the reduced-form empirical moments (treatment exit rate, control exit rate, regional comparison exit rate, and vacancy response curves), validating structural policy simulation counterfactuals.
Takeaway
Calibrate structural general equilibrium parameters by matching reduced-form experimental treatment effect moments using indirect inference.
Source and citation
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Plain-English glossary
Original explanations, informed by the references below. Examples are illustrations, not data from the studies above. The research text stays unchanged.
- Baseline
The starting measurements in a study. Researchers use these to compare what participants were like at the start with what happens later.
ExampleBefore a training programme starts, researchers measure workers’ earnings. That first measurement is the baseline.
GET-IT glossary · Baseline characteristics ↗Read more about baseline →