In this paper a stochastic model is used to analyse the matching process between skills demand and supply in a segmented labor market. We find the steady state solution of the dynamic system and we address the issue of the necessary conditions for the existence of a steady state and for the emergence of a “good” outcome i.e. an equilibrium towards the high level steady state. In a second step we discuss the sensitivity of the endogenous dynamics to parameters changes due to policy/institutional reforms. Last within this framework we discuss labor market frictions in the Mezzogiorno of Italy [JEL Code: D81, D83, J42].
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Length: 39 pages Date of creation: 11 Feb 2004 Date of revision: Handle: RePEc:wpa:wuwpge:0402002
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Find related papers by JEL classification: D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
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