1.2 Theory and facts The theory helps us understand how the facts are generated, and where the facts can help shape our thinking about the way labor markets work Model: simplify; The realism of assumption to the extent to which it helps us understand and predict how labor markets work4 • The theory helps us understand how the facts are generated, and where the facts can help shape our thinking about the way labor markets work. • Model: simplify; The realism of assumption to the extent to which it helps us understand and predict how labor markets work. 1.2 Theory and facts