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Hysteresis in an Evolutionary Labor Market with Adaptive Search

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Author Info
Leigh Tesfatsion (Iowa State University)

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Abstract

This study undertakes a systematic experimental investigation of hysteresis (path dependency) in an agent-based computational labor market framework. It is shown that capacity asymmetries between work suppliers and employers can result in two distinct hysteresis effects, network and behavioral, when work suppliers 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.

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File URL: http://129.3.20.41/eps/comp/papers/0004/0004003.pdf
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Publisher Info
Paper provided by EconWPA in its series Computational Economics with number 0004003.

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Length: 31 pages
Date of creation: 11 Nov 2000
Date of revision:
Handle: RePEc:wpa:wuwpco:0004003

Note: Type of Document - pdf; prepared on IBM PC - PC-TEX/; to print on HP/PostScript/; pages: 31; figures: included
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Web page: http://129.3.20.41

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Related research
Keywords: Dynamic labor market; Hysteresis (path dependency); Networks; Endogenous Interactions; Agent-based computational economics; Evolutionary game.;

Other versions of this item:

Find related papers by JEL classification:
J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
J2 - Labor and Demographic Economics - - Demand and Supply of Labor
D4 - Microeconomics - - Market Structure and Pricing
D8 - Microeconomics - - Information, Knowledge, and Uncertainty
L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
C6 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming
C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
C9 - Mathematical and Quantitative Methods - - Design of Experiments

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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.:
  1. John M. Abowd & Francis Kramarz & David N. Margolis, 1994. "High-Wage Workers and High-Wage Firms," CIRANO Working Papers 94s-23, CIRANO. [Downloadable!]
    Other versions:
  2. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-94, October. [Downloadable!] (restricted)
    Other versions:
  3. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," Working papers 427, Massachusetts Institute of Technology (MIT), Department of Economics.
    Other versions:
  4. Leigh TESFATSION, 1995. "How Economists Can Get Alife," Economic Report 37, Iowa State University Department of Economics. [Downloadable!]
  5. David MCFADZEAN & Leigh TESFATSION, 1996. "A C++ Platform For The Evolution Of Trade Networks," Economic Report 39, Iowa State University Department of Economics. [Downloadable!]
    Other versions:
  6. Leigh TESFATSION, 1995. "A Trade Network Game With Endogenous Partner Selection," Economic Report 36, Iowa State University Department of Economics. [Downloadable!]
    Other versions:
  7. Leigh Tesfatsion, 2002. "Agent-Based Computational Economics," Computational Economics 0203001, EconWPA, revised 15 Aug 2002. [Downloadable!]
  8. Laura Piscitelli, . "A Test for Strong Hysteresis," Computing in Economics and Finance 1997 2, Society for Computational Economics. [Downloadable!]
    Other versions:
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Cited by:
(explanations, 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.)

  1. 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. [Downloadable!]
  2. Filippo VERGARA CAFFARELLI, 2004. "Non-Cooperative Network Formation with Network Maintenance Costs," Economics Working Papers ECO2004/18, European University Institute. [Downloadable!]
  3. Pingle, Mark & Tesfatsion, Leigh S., 2003. "Evolution of Worker-Employer Networks and Behaviors Under Alternative Non-Employment Benefits: An Agent-Based Computational Approach," Staff General Research Papers 10376, Iowa State University, Department of Economics. [Downloadable!]
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