2002/07 LEM Working Paper Series

Labor Market Dynamics and Institutions: an Evolutionary Approach
 
Roberto Gabriele
 
  Keywords
 
Unemployment, Beveridge curve, matching, technical change.


  JEL Classification:
 
J63, J64, O12, J41.


  Abstract
 
We analyse labor market dynamics with an agent based model, which replicates a set of stylized facts in the labor market as well as aggregate regularities. We are able to reproduce the Beveridge curve, job creation and destruction flows, a persistent unemployment level, and wages stickiness. On the aggregate level, we observe a self-enforcing process of real income growth and average productivity growth.Model simulations allow us study the role of dynamic interactions among agents -individuals and firms- in a changing environment shaped by institutions.The key features are the microfoundations of the processes governing the labor market, such as job search by individuals, and matching and bargaining among firms and potential employees


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