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The Evolutionary Processes for the Populations of Firms and Workers

Author

Listed:
  • Elvio Accinelli Gamba

    (Facultad de Economia, Universidad Autonoma de San Luis Potosi)

  • Edgar J. Sánchez Carrera

    (Department of Economics, University of Siena)

Abstract

This paper analyzes the cultural evolution of firms and workers. Following an imitation rule, each firm and worker decides whether to be innovative (or not) and skilled (or unskilled). We apply evolutionary game theory to find the system of replicator dynamics, and characterize the low-level and high-level equilibria as Evolutionarily Stable Strategies (ESS) “against the field.” Hence, we study how a persistent state of underdevelopment can arise in strategic environments in which players are imitative rather than rational maximizers. We show that when the current state of the economy is in the basin of attraction of the poverty trap, players should play against the field if they want to change their status quo. The threshold level to overcome the poverty trap can be lowered if there is an appropriate policy using income taxes, education costs and skill premia. Hence, we study the replicator dynamics with a subsidy and payoff taxation to overcome the poverty trap.

Suggested Citation

  • Elvio Accinelli Gamba & Edgar J. Sánchez Carrera, 2010. "The Evolutionary Processes for the Populations of Firms and Workers," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 39-68, May.
    • Handle: RePEc:ere:journl:v:xxix:y:2010:i:1:p:39-68
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    File URL: http://www.economia.uanl.mx/revistaensayos/xxix/1/accinelli-sanchez-the-evolutionary-processes.pdf
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    References listed on IDEAS

    as
    1. Hornstein, Andreas & Krusell, Per & Violante, Giovanni L., 2005. "The Effects of Technical Change on Labor Market Inequalities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 20, pages 1275-1370, Elsevier.
    2. Hornstein, Andreas & Krusell, Per & Violante, Giovanni L., 2005. "The Effects of Technical Change on Labor Market Inequalities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 20, pages 1275-1370, Elsevier.
    3. Elvio Accinelli & Silvia London & Edgar J. Sanchez Carrera, 2009. "A Model of Imitative Behavior in the Population of Firms and Workers," Department of Economics University of Siena 554, Department of Economics, University of Siena.
    4. repec:pri:cepsud:113krusell is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    Cited by:

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    More about this item

    Keywords

    Imitative behavior; conformism; poverty traps; skill premium; strategic complementarities;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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