What is applied microeconomics?

Answer 1

Applied microeconomics is a sub-field of economics which uses data and econometric methods to test economic theory. Sometimes the theory being tested is well-defined but often it is a general question where the researcher does not have a specific theoretical prediction.

Within applied microeconomics there are several well-recognized distinctions. Applied micro is an umbrella term for empirical work in labor, urban, industrial organization, public, health, and political economy. While these are its traditional realms, economists have also used the same econometric methods in other areas which has lead some to claim economics is "imperialistic."

Furthermore, a distinction is often made between "reduced-form" and structural work. Reduced form is not directly guided by a theory whereas structural derives an estimating equation from a theoretical model.