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

Giorgio Fagiolo (), Giovanni Dosi and Roberto Gabriele ()

Chapter 5 in Industry and Labor Dynamics:The Agent-Based Computational Economics Approach, 2004, pp 59-89 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractIn 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) workers search; (iii) wage setting; (iv) endogenous formation of aggregate demand; (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’s curves under quite broad behavioral and institutional settings. The system generates endogenously an Okun’s coefficient greater than one even if individual firms employ production functions exhibiting constant returns to labor. Montecarlo simulations also indicate that statistically detectable shifts in Okun’s 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.

Keywords: Simulation; Agent-Based; Computational Economics; Labor; Industrial Dynamics; Innovation; Cluster; Firm Behavior (search for similar items in EconPapers)
Date: 2004
References: Add references at CitEc
Citations: View citations in EconPapers (89)

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789812702258_0005 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789812702258_0005 (text/html)
Ebook Access is available upon purchase.

Related works:
Journal Article: MATCHING, BARGAINING, AND WAGE SETTING IN AN EVOLUTIONARY MODEL OF LABOR MARKET AND OUTPUT DYNAMICS (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789812702258_0005

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().