This section should basically consist of two parts (both of which should be brief). 1) The first section should discuss previous research that is directly relevant to your paper (not every single paper written on the topic). The review need not only be topical, but can include research that employs the same methods you are using, analyzes a similar model, uses the same dataset, etc.
2) The second section should explain your contribution in more detail. You should discuss how your approach is different from what has been done before: Is it new data? A new model? A new identification strategy? Are you answering a question more broadly/specifically? Specifically comparing how you are improving on a previous paper is useful. You should think creatively in this section about issues of external validity: Are your findings relevant for a population/institutional environment that is different from previous work, and could this be the reason your findings differ?
This is the Empirical Economics Paper:
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