Advanced Search
MyIDEAS: Login to save this article or follow this journal

An evolutionary model of industry dynamics and firms’ institutional behavior with job search, bargaining and matching

Contents:

Author Info

  • Sandra Silva
  • Jorge Valente
  • Aurora Teixeira

    ()

Abstract

This paper proposes an evolutionary model that captures the main dynamics of a world where heterogeneous firms and workers interact and co-evolve. Within a micro-meso perspective, the model focuses on the influence of firms' "institutional settings" on industry dynamics, formalizing these settings as firms' labor choices. Benefiting from insights offered by mainstream labor economics, we introduce the dynamic processes of job search, bargaining and matching in an evolutionary framework. The results of a computer simulation model show that in a stable environment there is an initial clear improvement in the average fitness of the population of incumbent firms, which then evolves around an evolutionary stationary threshold. The consideration of endogenous matching and bargaining processes in the labor market results in important frictions. Furthermore, the simulation results show an increasing wage inequality between the two types of workers considered in the model. We also consider the effect of both positive and negative demand shocks. The turbulence in the industry increases (decreases) after the negative (positive) demand shock. As expected, the negative demand shock causes a decrease in the number of vacancies and, consequently, the unemployment rates increase considerably. Following the positive demand shock, on the other hand, the firms slightly increase the number of vacancies, so the behavior in terms of unemployment rates is better than in the model without shocks.

(This abstract was borrowed from another version of this item.)

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://hdl.handle.net/10.1007/s11403-011-0085-y
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Springer in its journal Journal of Economic Interaction and Coordination.

Volume (Year): 7 (2012)
Issue (Month): 1 (May)
Pages: 23-61

as in new window
Handle: RePEc:spr:jeicoo:v:7:y:2012:i:1:p:23-61

Contact details of provider:
Web page: http://www.springer.com/economics/economic+theory/journal/11403

Order Information:
Web: http://link.springer.de/orders.htm

Related research

Keywords: Evolutionary; Firm behaviour; Job search; Bargaining and matching; Micro foundations; Industrial dynamics; B52; D21; L2; J2; J3; O12;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
  2. Esben Sloth Andersen, 1999. "Multisectoral Growth and National Innovation Systems," Nordic Journal of Political Economy, Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 25, pages 33-52.
  3. Marco Valente, 1998. "Laboratory for Simulation Development," DRUID Working Papers 98-5, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  4. Malerba, Franco & Orsenigo, Luigi, 1995. "Schumpeterian Patterns of Innovation," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 19(1), pages 47-65, February.
  5. Davide Antonioli & Paolo Pini & Rocco Manzalini, 2011. "Innovation, Workers Skills and Industrial Relations: Empirical Evidence from Firm-level Italian Data," Working Papers 201106, University of Ferrara, Department of Economics.
  6. Neugart, Michael, 2008. "Labor market policy evaluation with ACE," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 67(2), pages 418-430, August.
  7. Carrillo, Juan D & Gromb, Denis, 2002. "Cultural Inertia and Uniformity in Organizations," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3613, C.E.P.R. Discussion Papers.
  8. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 7(1), pages 48-71, January.
  9. Durlauf,S.N. & Fafchamps,M., 2004. "Social capital," Working papers, Wisconsin Madison - Social Systems 12, Wisconsin Madison - Social Systems.
    • Durlauf, Steven N. & Fafchamps, Marcel, 2005. "Social Capital," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 26, pages 1639-1699 Elsevier.
  10. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, December.
  11. Acemoglu, Daron & Aghion, Philippe & Violante, Giovanni L., 2001. "Deunionization, technical change and inequality," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 55(1), pages 229-264, December.
  12. David H. Autor & Frank Levy & Richard J. Murnane, 2001. "The Skill Content of Recent Technological Change: An Empirical Exploration," NBER Working Papers 8337, National Bureau of Economic Research, Inc.
  13. Tor Jakob Klette & Samuel Kortum, 2004. "Innovating Firms and Aggregate Innovation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 112(5), pages 986-1018, October.
  14. Rutherford,Malcolm, 1996. "Institutions in Economics," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521574471.
  15. Matthias Weiss & Alfred Garloff, 2005. "Skill Biased Technological Change and Endogenous Benefits: The Dynamics of Unemployment and Wage Inequality," MEA discussion paper series, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy 05100, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  16. Robert W. Rosenthal, 1992. "Rules of Thumb in Games," Papers, Boston University - Industry Studies Programme 0034, Boston University - Industry Studies Programme.
  17. Baron, James N & Burton, M Diane & Hannan, Michael T, 1996. "The Road Taken: Origins and Evolution of Employment Systems in Emerging Companies," Industrial and Corporate Change, Oxford University Press, vol. 5(2), pages 239-75.
  18. Mortensen, Dale T & Pissarides, Christopher, 1999. "New Developments in Models of Search in the Labour Market," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2053, C.E.P.R. Discussion Papers.
  19. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
  20. Jolivet, Gregory & Postel-Vinay, Fabien & Robin, Jean-Marc, 2006. "The empirical content of the job search model: Labor mobility and wage distributions in Europe and the US," European Economic Review, Elsevier, Elsevier, vol. 50(4), pages 877-907, May.
  21. Richard R. Nelson & Sidney G. Winter, 2002. "Evolutionary Theorizing in Economics," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(2), pages 23-46, Spring.
  22. Leigh TESFATSION, 1995. "How Economists Can Get Alife," Economic Report, Iowa State University Department of Economics 37, Iowa State University Department of Economics.
  23. Ulrich Witt, 2008. "What is specific about evolutionary economics?," Journal of Evolutionary Economics, Springer, Springer, vol. 18(5), pages 547-575, October.
  24. Peter Gottschalk, 1997. "Inequality, Income Growth, and Mobility: The Basic Facts," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 11(2), pages 21-40, Spring.
  25. Borjas, George J & Ramey, Valerie A, 1994. "Time-Series Evidence on the," American Economic Review, American Economic Association, American Economic Association, vol. 84(2), pages 10-16, May.
  26. Cabral, Luís M B & Mata, José, 2001. "On the Evolution of the Firm Size Distribution: Facts and Theory," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3045, C.E.P.R. Discussion Papers.
  27. Finegold, David & Soskice, David, 1988. "The Failure of Training in Britain: Analysis and Prescription," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 4(3), pages 21-53, Autumn.
  28. George E. Johnson, 1997. "Changes in Earnings Inequality: The Role of Demand Shifts," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 11(2), pages 41-54, Spring.
  29. Mortensen, Dale T, 1970. "Job Search, the Duration of Unemployment, and the Phillips Curve," American Economic Review, American Economic Association, American Economic Association, vol. 60(5), pages 847-62, December.
  30. Alberto Baccini & Martina Cioni, 2005. "Is technological change really skill biased? Evidence from the introduction of ICTs on the textile sector (1980-2000)," Department of Economics University of Siena, Department of Economics, University of Siena 465, Department of Economics, University of Siena.
  31. Hartmut Egger & Volker Grossmann, 2005. "Non-Routine Tasks, Restructuring of Firms, and Wage Inequality Within and Between Skill-Groups," Journal of Economics, Springer, Springer, vol. 86(3), pages 197-228, December.
  32. Wood, Adrian, 1998. "Globalisation and the Rise in Labour Market Inequalities," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 108(450), pages 1463-82, September.
  33. J. David Richardson, 1995. "Income Inequality and Trade: How to Think, What to Conclude," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 9(3), pages 33-55, Summer.
  34. Abowd, John M. & Kramarz, Francis, 2003. "The costs of hiring and separations," Labour Economics, Elsevier, Elsevier, vol. 10(5), pages 499-530, October.
  35. Joshua M. Epstein & Robert L. Axtell, 1996. "Growing Artificial Societies: Social Science from the Bottom Up," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550253, December.
  36. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, Elsevier, vol. 13(6), pages 343-373, December.
  37. Elinor Ostrom, 2000. "Collective Action and the Evolution of Social Norms," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 14(3), pages 137-158, Summer.
  38. Dosi, Giovanni, et al, 1997. "Industrial Structures and Dynamics: Evidence, Interpretations and Puzzles," Industrial and Corporate Change, Oxford University Press, vol. 6(1), pages 3-24.
  39. Mortensen, Dale T, 1999. "Equilibrium Unemployment Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 889-914, November.
  40. Richard R. Nelson, 1995. "Recent Evolutionary Theorizing about Economic Change," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 48-90, March.
  41. G. Fagiolo & G. Dosi & R. Gabriele, 2004. "Matching, Bargaining, And Wage Setting In An Evolutionary Model Of Labor Market And Output Dynamics," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 157-186.
  42. Leigh Tesfatsion & Mark Pingle, 2003. "Evolution of Worker-Employer Networks and Behaviors Under Alternative Non-Employment Benefits: An Agent-Based Computational Study," Computing in Economics and Finance 2003 7, Society for Computational Economics.
  43. Edward Lorenz & Antoine Valeyre, 2004. "Organisational Change in Europe: National Models or the Diffusion of a New "One Best Way"?," DRUID Working Papers 04-04, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  44. Beach, R. & Muhlemann, A. P. & Price, D. H. R. & Paterson, A. & Sharp, J. A., 2000. "A review of manufacturing flexibility," European Journal of Operational Research, Elsevier, Elsevier, vol. 122(1), pages 41-57, April.
  45. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 13(4), pages 421-440, December.
  46. Gregg, Paul & Wadsworth, Jonathan, 1995. "A Short History of Labour Turnover, Job Tenure, and Job Security, 1975-93," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 11(1), pages 73-90, Spring.
  47. Oesch, Daniel & Rodriguez Menes, Jorge, 2010. "Upgrading or polarization? Occupational change in Britain, Germany, Spain and Switzerland, 1990-2008," MPRA Paper 21040, University Library of Munich, Germany.
  48. Jeroen Bergh & Sigrid Stagl, 2003. "Coevolution of economic behaviour and institutions: towards a theory of institutional change," Journal of Evolutionary Economics, Springer, Springer, vol. 13(3), pages 289-317, August.
  49. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  50. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, American Economic Association, vol. 75(2), pages 332-37, May.
  51. Richard B. Freeman, 1995. "Are Your Wages Set in Beijing?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 9(3), pages 15-32, Summer.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:spr:jeicoo:v:7:y:2012:i:1:p:23-61. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.