Unraveling the separate implications of labor market structural
features, learning effects, and network effects on: (a) job search and
matching; (b) worksite behaviors; and (c) market power and efficiency
outcomes;
Sensitivity of labor market outcomes to alternative labor market
institutions (e.g., minimum wage laws, unemployment benefit programs,
and the degree of centralization of the wage-setting process);
How do cultural norms affect labor market processes? For example,
to what extent are social networks important for job search and matching
in different cultures?
Empirical Conundrums: For example, what explains the large variance in
wage earnings and in employment histories across observationally
similar workers?
Richard B. Freeman, War of the Models: Which Labour Market
Institutions for the 21st Century?, Labour Economics Vol. 5, No.
1, 31 March 1998, 1-24. Full text of article available from
science@direct.
Abstract:
This is a highly entertaining and accessible account of key controversies
affecting labor market policy in particular and macroeonomics in general.
The author discusses new theoretical and empirical tools that seem
particularly well suited for the analysis of labor issues, including the
building of "artificial agent simulated societies."
Leigh tesfatsion, "Labor Institutions and Market Performance: An Agent-Based
Computational Economics Approach"(pdf,88K)
Abstract: This presentation discusses the potential usefulness of ACE
for exploring the sensitivity of market performance to alternative specifications for
labor market institutions. An unemployment benefits study is used for concrete
illustration; see the annotated entry for Pingle and Tesfatsion (2003) in the following section.
Truman Bewley, Why Don't Wages Fall During a Recession?, Harvard
University Press, Cambridge, MA, 1999.
Abstract:
The author reports on extensive interviews conducted with over 300
business people, labor leaders, counselors of the unemployed, and business
consultants in the northeast U.S. during the early 1990s. He finds that
social considerations outside of conventional economic theory strongly
influence the wage-setting process. Based on these findings, he argues that
firms should be viewed (and modeled) as communities, not simply as profit
maximizers, because considerations such as trust, enthusiasm, and commitment
are needed to make firms function well.
William Darity, Jr., and Arthur H. Goldsmith, Social Psychology,
Unemployment and Macroeconomics, Journal of Economic Perspectives
10:1 (Winter 1996), 121-140.
Abstract:
The author discusses recent developments in the social psychology
literature relevant for the modelling of labor markets. He then sketches a
behavioral model of the macroeconomy that incorporates some of these insights
and uses the model to derive new insights into productivity, job search
strategies, and layoff protocols.
Giorgio Fagiolo, Giovanni Dosi, and Roberto Gabriele, Towards an
Evolutionary Intepretation of Aggregate Labor Market Regularities(pdf,35pp,387K),
Working Paper, Sant'Anna School of Advanced Studies, Pisa, Italy, January 21,
2004.
Abstract:
The authors study job matching and bargaining, wage and price setting,
and output demand and supply formation in the context of an agent-based
computational model of a decentralized market economy consisting of a labor
and a product market. The objective of the authors is to provide possible
"bottom up" micro explanations for well-known macro empirical regularities
(e.g., the Beveridge curve, Okun's Law, and wage data patterns).
Roberto Gabriele, Labor Market Dynamics and Institutions: An
Evolutionary Approach, LEM Paper 2002-07, Laboratory of Economics and
Management, Sant'Anna School of Advanced Studies, Pisa, downloadable at
EconPapers.
John Haltiwanger, Julia Lane, Jim Spletzer, Jules Theeuwes, and Ken Troske (eds.),
The Creation and Analysis of Employer and Employee Matched Data, North Holland, 1999.
Abstract: Elaborates on essential insights to be gained from combining
traditional labor economics with industry studies research. Discusses potential
advantages of creating matched employer-employee data sets for facilitating the study and
understanding of the interactions of firms and workers.
Roberto Leombruni and Matteo Richiardi (eds.), Industry and Labor
Dynamics: The Agent-Based Computational Economics Approach, World
Scientific Publishing Co., 432pp., November 2004, ISBN: 9-812-56101-3.
Abstract: This book is the published proceedings of the
WILD@ACE 2003 Workshop held in Torino, Italy, 3-4 October 2003. The acronym
"WILD@ACE" stands for "Workshop on Industrial and Labor Dynamics: The
Agent-Based Computational Economics Approach." The workshop focused on the
potential use of agent-based simulation for the investigation of labor
economics and industrial organization issues. The book includes a selection
of contributed papers on methodology, microsimulation of labor dynamics, firm
behavior, and industrial clusters and firm interaction. For more
information, visit
here.
Barbara Petrongolo and Christopher A. Pissarides, Looking into the
Black Box: A Survey of the Matching Function, Journal of Economic
Literature, Vol. 39 (June 2001), pp. 390-431.
Mark Pingle and Leigh Tesfatsion, "Evolution of Worker-Employer
Networks and Behaviors Under Alternative Non-Employment Benefits: An
Agent-Based Computational Study", pp. 256-285 in Anna Nagurney (ed.),
Innovations in Financial and Economic Networks, New Dimensions in
Networks Book Series, Edward Elgar Publishers, 2003
(pdf preprint,269K),
(pdf presentation,88K).
Abstract: This study replaces the standard exogenously-given
worker-employer matching function with endogenous preferential worker-employer
matching based on past work-site experiences.
Workers and employers participate in a sequential employment game
with adaptive job search and incomplete contracts. Matched workers and
employers participate in a work-site game. The study examines the effects of a
non-employment payoff (NEP) on network formation and work-site behaviors.
Taking both utility benefits and program costs into account, the highest efficiency is achieved
with a moderate NEP level. A zero NEP encourages too much shirking on the
work-site, while a high NEP results in too high a risk of lost earnings due
to coordination failure.
Richard Rogerson, Theory Ahead of Language in the Theory of
Unemployment, Journal of Economic Perspectives 11 (1997), 73-92.
Troy Tassier and Filippo Menczer,
"Emerging Small-World Referral Networks
in Evolutionary Labor Markets",
IEEE Transactions on Evolutionary Computation, Volume 5, Number 5,
October 2001.
Abstract: The authors construct an ACE labor market
model in which potential workers engage in both social network formation and
direct job search. They show that the evolved social networks have "small
world network" properties in the sense that they are both very clustered
(locally structured) and have global reach, and that these two properites
enhance the ability of the social networks to perform as job referral
networks. Nevertheless, as evolution progresses, agents end up expending
more energy on social network formation and/or direct job search than is
socially efficient.
Leigh Tesfatsion, "Structure, Behavior, and Market Power in an
Evolutionary Labor Market with Adaptive Search"(pdf,295K),
Journal of Economic Dynamics and Control 25 (2001), pp. 419-457.
The published article is also available from
Science Direct.
Abstract:
This study undertakes a systematic
experimental investigation of the relationship between market power and labor
market structure (concentration and capacity conditions)
when workers and employers preferentially match based on past worksite experiences.
For each tested
market structure, workers and employers repeatedly seek preferred
worksite partners based on continually updated expected utility, engage in
efficiency-wage worksite interactions modeled as prisoner's dilemma games,
and evolve their worksite behaviors over time. A key finding is the presence
of strong learning and network effects. Each tested market structure maps
into a "spectral" distribution of observed interaction networks exhibiting
one dominant attractor (frequent network pattern) with one or two weaker
attractors (less frequent network patterns). Market structure is strongly
predictive for the relative market power of workers and employers
across all network attractors, but the magnitudes of the market power
levels attained by workers and employers vary widely across the network
attractors.
Leigh Tesfatsion, "Hysteresis in an Evolutionary Labor Market with
Adaptive Search," pp. 189-210 in S.-H. Chen (ed.), Evolutionary
Computation in Economics and Finance, Physica-Verlag Heidelberg, New
York, 2002
[(ps preprint,216K),
(pdf preprint,534K)].
Abstract:
This study undertakes a systematic
experimental investigation of hysteresis (path dependency)
when workers and employers preferentially match based on past worksite experiences.
It is shown that two distinct hysteresis effects can arise,
network and behavioral, when workers and employers interact
strategically and evolve their worksite behaviors over time. These
hysteresis effects result in persistent heterogeneity in earnings and
employment histories across agents who have no observable structural
differences. At a more global level, these hysteresis effects are shown to
result in a one-to-many mapping between treatment factors and experimental
outcomes. These hysteresis effects may help to explain why excess earnings
heterogeneity is commonly observed in real-world labor markets.
Leigh Tesfatsion, "Preferential Partner Selection in Evolutionary
Labor Markets: A Study in Agent-Based Computational Economics," pp. 15-24
in V. W. Porto, N. Saravanan, D. Waagen, and A. E. Eiben (eds.),
Evolutionary Programming VII, Proceedings of the Seventh Annual
Conference on Evolutionary Programming, Springer-Verlag, Berlin, 1998
(ps preprint,130K).
Abstract: This study develops an agent-based computational labor
market framework for studying the formation and evolution of contractual
networks between workers and employers. Resource-constrained workers and
employers choose and refuse contractual partners on the basis of continually
updated expected utility, engage in risky worksite interactions modelled as
two-person "efficiency-wage" prisoner's dilemma games, and evolve their
work-site strategies over time on the basis of past worksite earnings.
Illustrative computational experiments are reported and interpreted.
Roberto Leombruni and Matteo Richiardi maintain a web page for the
LABORatorio Riccardo Revelli,
a research institute of CORIPE Piemonte directed by Bruno Contini (University
of Torino, Italy). The institute specializes in agent-based models of labor
and industry dynamics. Resources available at this site include lab
publications, data bases, conference and workshop information, and related
links.
TheInstitute for Empirical Research in Economics
(University of Zurich, Switzerland), headed by Prof.Dr. Ernst Fehr, provides
links to a variety of resources related to microeconomics and experimental
economics on its home page. Institute researchers combine insights from
modern economic theory with results from social psychology and sociology to
understand important economic phenomena. Topics stressed include the
functioning of labor markets, the organization of the modern corporation, the
private and public provision of public goods, and intertemporal choice
problems.
Giorgio Fagiolo
(Laboratory of Economics and Management, Sant'Anna School of Advanced
Studies, Pisa, Italy): ACE model of labor dynamics; Local interaction models;
Evolution of social and economic networks; Learning; Endogenous interactions;
Economics of innovation and technical change.
Roberto Gabriele
(Laboratory of Economics and Management, Sant'Anna School of Advanced
Studies, Pisa, Italy): Labor market dynamics and institutions; Evolutionary
modeling; Agent-based modeling.
Peter Howitt
(Department of Economics, Brown University, Providence, Rhode Island): Job
creation and destruction; The emergence of economic organization; Monetary
exchange; Endogenous growth.
Filippo Menczer
(School of Informatics and Department of Computer Science, Indiana
University, Bloomington): Adaptive and evolutionary computation applied to
intelligent and distributed information agents; Interactions between learning
and evolution; Distributed decision making; Artificial life.
Michael Neugart
(Wissenschaftszentrum Berlin fur Sozialforschung, Germany): Labor economics;
Endogenous matching functions; Nonlinear economic dynamics; Political
economics; Agent-based computational modeling; Applied econometrics.
Troy Tassier
(Department of Economics, Fordham University, Bronx, NY): Microeconomics;
Public policy; Labor economics; Agent-based computational economics.
Leigh Tesfatsion
(Economics, Iowa State University): ACE labor market studies; Market power,
efficiency, path dependence, network formation, and "excess earnings
heterogeneity" in labor markets; Evolution of cooperation in labor markets;
Labor market experiments with real and computational agents.