Towards a Non-Equilibrium Unemployment Theory

Matteo Richiardi

No 37, LABORatorio R. Revelli Working Papers Series from LABORatorio R. Revelli, Centre for Employment Studies

Abstract: This paper presents a non-equilibrium, agent-based model of workers and firms, with on-the-job searching, endogenous entrepreneurial decisions and endogenous wage and income determination. Workers and firms are heterogeneous, and learn their strategy in the labor market. The model is able to reproduce a number of stylized facts generally accepted in labor economics and industrial organization, such as the Wage, Beveridge and Okun curve, and the skewness of wage, income and firm size distribution. Most interestingly, important stylized facts such as a negatively sloped Wage Curve and a constant returns to scale matching function emerge only out-of-equilibrium, during the adjustment processes toward the stationary state. The results stress three points. First, the use of non-equilibrium computational models allows for a more comprehensive investigation of the labor market, by considering the endogenous character of many relevant variables. Second, it may be the case that (some) of the stylized facts upon which many equilibrium models have been built may be just out-of-equilibrium properties of the real economies. Third, the joint determination of all aggregate relationships and their dependence on the equilibrium or non-equilibrium state of the system suggest to move from the investigation of empirical regularities in isolation one from the other to a joint analysis.

Keywords: Unemployment; Entrepreneurship; Firm demography; Simulation; Beveridge; Okun; Wage Curve. (search for similar items in EconPapers)
JEL-codes: C15 J60 L11 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.laboratoriorevelli.it/_pdf/wp37.pdf (application/pdf)

Related works:
Journal Article: Toward a Non-Equilibrium Unemployment Theory (2006)
Journal Article: Toward a Non-Equilibrium Unemployment Theory (2006)
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:cca:wplabo:37

Access Statistics for this paper

More papers in LABORatorio R. Revelli Working Papers Series from LABORatorio R. Revelli, Centre for Employment Studies Contact information at EDIRC.
Bibliographic data for series maintained by Giovanni Bert ().