Online Appendix for "Labor Markets and Productivity in Developing Countries"

This appendix provides more details on how we calibrate the model, including parameter choices. Our solution procedure is to reduce each model to a set of nonlinear equations and then solve them numerically to obtain the unconstrained parameters and outcomes at the baseline equilibrium. We then use a similar procedure to solve for the new equilibrium in response to a parameter change. At each stage we check that the key equations for the steady-state of the model are satisfied by the derived equilibrium. These calculations are carried out in three interconnected worksheets, all found in the single Excel spreadsheet, satchitemplecalib.xls Use of this Excel spreadsheet requires the Solver Add-in to be installed (use Add-ins under the Tools menu to install the Solver Add-in). The Solver should be available under the Tools menu.