A Cge Model for Labour Policy Assessment

Margherita Scarlato

QA - Rivista dell'Associazione Rossi-Doria, 2002, issue 3

Abstract: In the less developed regions of Italy, the so-called Mezzogiorno, the level of human capital is lower compared to the advanced regions od the Centre-North. We use a Computable General Equilibrium (Cge) Model to show that an increase in the demand and supply of skilled labor in the human capital-scarce regions has a smaller impact on the production activities, the aggregate income and the investments of both North and South compared to an equivalent increase in the human capital-abundant regions. This result leads to a wrong incentive for the private agents towards the underinvestment in human capital and locks the Southern regions in a trap at a low level of both economic development and human capital accumulation. Absent suitable shocks or policy interventions, this outcome is self-reinforcing.

Keywords: Human Capital; Cge Models; Regional Gaps (search for similar items in EconPapers)
JEL-codes: C68 J24 R58 (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:rar:journl:0166

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