ENDOGENOUS MATCHING FUNCTIONS: AN AGENT-BASED COMPUTATIONAL APPROACH

2004 ◽  
Vol 07 (02) ◽  
pp. 187-201 ◽  
Author(s):  
MICHAEL NEUGART
Keyword(s):  
Labor Market ◽  
Job Search ◽  
Returns To Scale ◽  
Job Creation ◽  
Market Model ◽  
Small Range ◽  
Matching Function ◽  
Agent Based ◽  
Flow Models ◽  
Endogenous Matching

The matching function has become a popular tool in labor economics. It relates job creation (a flow variable) to two stock variables: vacancies and job searchers. In most studies the matching function is considered to be exogenous and assumed to have certain properties. The present study, instead, looks at the properties of an endogenous matching function. For this purpose we have programmed an agent-based computational labor market model with endogenous job creation and endogenous job search behavior. Our~simulations suggest that the endogenous matching technology is subject to decreasing returns to scale. The Beveridge curve reveals substitutability of job searchers and vacancies for a small range of inputs, but is flat for relatively high numbers of job searchers and vertical for relatively high numbers of vacancies. Moreover, the matching technology changes with labor market policies. This raises concerns about the validity of labor market policy evaluations conducted with flow models of the labor market that employ exogenous matching functions.

scholarly journals A Welfare Economic Analysis of Labor Market Policies in the Harris-Todaro Model

2018 ◽  
pp. 343-366 ◽  
Author(s):  
Gary S. Fields
Keyword(s):  
Labor Market ◽  
Economic Analysis ◽  
Job Creation ◽  
Welfare Economic ◽  
Market Model ◽  
Modern Sector ◽  
Labor Earnings ◽  
Labor Market Policies ◽  
Total Labor ◽  
Economic Analyses

This chapter presents a welfare economic analysis of the benefits of various labor market policies in the Harris-Todaro labor market model. The policies considered are a policy of modern sector job creation, called modern sector enlargement (MSENL); a policy of rural development, called traditional sector enrichment (TSENR); and a policy of wage limitation in the urban economy, called modern sector wage restraint (MSWR). First, the inequality effects of these policies are analyzed. Then two welfare economic analyses are performed, the first based on summary measures of labor market conditions (total labor earnings, unemployment, inequality of labor incomes, and poverty rates) and the second based on dominance analysis in the labor market, in both cases assuming that the costs are borne elsewhere. The results of the welfare analyses are compared, and it is shown that TSENR unambiguously increases welfare in the labor market using both approaches, the other policies yield ambiguous results, and no policy is unambiguously welfare-decreasing.

scholarly journals On-the-Job Search in a Labor Market Model: Ex Ante Choices and Ex Post Outcomes

2018 ◽  
pp. 99-118 ◽  
Author(s):  
Gary S. Fields
Keyword(s):  
Labor Market ◽  
Labor Force ◽  
Job Search ◽  
Rational Expectations ◽  
Market Model ◽  
Modern Sector ◽  
Market Outcomes ◽  
Ex Post ◽  
Rural And Urban ◽  
Ex Ante

This chapter builds a multi-sector labor market model including wage dualism, open unemployment, underemployment, on-the-job search, and expected wage equalization. The innovative feature of this model is the distinction between the ex ante allocation of the labor force among search strategies and the ex post allocation of the labor force among labor market outcomes. Among the findings are: more efficient on-the-job search lowers the equilibrium unemployment rate; in a rational expectations equilibrium, the average rural and urban wages will not be equal; modern sector enlargement may leave labor market conditions in one of the sectors unchanged, even when wages and employment in that sector are fully flexible.

scholarly journals MATCHING, BARGAINING, AND WAGE SETTING IN AN EVOLUTIONARY MODEL OF LABOR MARKET AND OUTPUT DYNAMICS

2004 ◽  
Vol 07 (02) ◽  
pp. 157-186 ◽  
Author(s):  
G. FAGIOLO ◽  
G. DOSI ◽  
R. GABRIELE
Keyword(s):  
Labor Market ◽  
Job Search ◽  
Aggregate Demand ◽  
Returns To Scale ◽  
Evolutionary Model ◽  
Technological Parameters ◽  
Wage Setting ◽  
Institutional Settings ◽  
Labor Market Dynamics ◽  
Constant Returns To Scale

In this paper, we present an agent-based, evolutionary, model of output- and labor-market dynamics. Firms produce a homogeneous, perishable good under constant returns to scale using labor only. Labor productivities are firm-specific and change stochastically due to technical progress. The key feature of the model resides in an explicit microfoundation of the processes of : (i) matching between firms and workers, (ii) job search, (iii) wage setting, (iv) endogenous formation of aggregate demand, and (v) endogenous price formation. Moreover, we allow for a competitive process entailing selection of firms on the basis of their revealed competitiveness. Simulations show that the model is able to robustly reproduce Beveridge, Wage and Okun curves under quite broad behavioral and institutional settings. The system generates endogenously an Okun coefficient greater than one even if individual firms employ production functions exhibiting constant returns to labor. Monte Carlo simulations also indicate that statistically detectable shifts in Okun and Beveridge curves emerge as the result of changes in institutional, behavioral, and technological parameters. Finally, the model generates sharp predictions about how system parameters affect aggregate performance (i.e. average GDP growth) and its volatility.

scholarly journals A MULTIAGENT SIMULATION OF A STYLIZED FRENCH LABOR MARKET: EMERGENCES AT THE MICRO LEVEL

2008 ◽  
Vol 11 (02) ◽  
pp. 217-230 ◽  
Author(s):  
ZACH LEWKOVICZ ◽  
JEAN-DANIEL KANT
Keyword(s):  
Labor Market ◽  
Large Scale ◽  
Multiagent System ◽  
Matching Function ◽  
Simulation Framework ◽  
Agent Based ◽  
Multiagent Simulation ◽  
New Type ◽  
Micro Level ◽  
Job Instability

The aim of this work is to design a multiagent system (MAS) simulation to model the French labor market. We departed from an economic model proposed by Cahuc and Carcillo to model the introduction of a new job contract into the labor market. We designed a specific methodology to convert this equation-based model to an agent-based model, and calibrated our MAS to reproduce the data found in the economic simulations. As we observed the same tendencies found in the former model, a new dimension emerged from the agent-based simulation: an increase of oscillations for the characteristic rates, revealing an increase of precariousness (job instability) due to the new type of contract. Moreover, our simulation enabled us to detect and correct some flaws of the Cobb–Douglas type of matching function. These encouraging results led us to continue in that direction, where several extensions of our model can be proposed, including the move to a large-scale simulation framework.

scholarly journals Job Creation in a Multi-Sector Labor Market Model for Developing Economies

2016 ◽  
Author(s):  
Arnab K. Basu ◽  
Nancy H. Chau ◽  
Gary S. Fields ◽  
Ravi Kanbur
Keyword(s):  
Labor Market ◽  
Developing Economies ◽  
Job Creation ◽  
Market Model

AN AGENT-BASED LABOR MARKET SIMULATION WITH ENDOGENOUS SKILL-DEMAND

2008 ◽  
Vol 19 (03) ◽  
pp. 495-508
Author(s):  
S. GEMKOW
Keyword(s):  
Labor Market ◽  
Matching Function ◽  
Skilled Workers ◽  
Agent Based ◽  
Unemployment Rates ◽  
Market Simulation ◽  
Theoretical Approaches ◽  
Highly Skilled ◽  
Skill Groups ◽  
Skill Requirements

This paper considers an agent-based labor market simulation to examine the influence of skills on wages and unemployment rates. Therefore less and highly skilled workers as well as less and highly productive vacancies are implemented. The skill distribution is exogenous whereas the distribution of the less and highly productive vacancies is endogenous. The different opportunities of the skill groups on the labor market are established by skill requirements. This means that a highly productive vacancy can only be filled by a highly skilled unemployed. Different skill distributions, which can also be interpreted as skill-biased technological change, are simulated by incrementing the skill level of highly skilled persons exogenously. This simulation also provides a microeconomic foundation of the matching function often used in theoretical approaches.

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