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A Cge Model for Labour Policy Assessment


  • Margherita Scarlato


In the less developed regions of Italy, the so-called Mezzogiorno, the level of human capital is lower compared to the advanced regions od the Centre-North. We use a Computable General Equilibrium (Cge) Model to show that an increase in the demand and supply of skilled labor in the human capital-scarce regions has a smaller impact on the production activities, the aggregate income and the investments of both North and South compared to an equivalent increase in the human capital-abundant regions. This result leads to a wrong incentive for the private agents towards the underinvestment in human capital and locks the Southern regions in a trap at a low level of both economic development and human capital accumulation. Absent suitable shocks or policy interventions, this outcome is self-reinforcing.

Suggested Citation

  • Margherita Scarlato, 2002. "A Cge Model for Labour Policy Assessment," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 3, November.
  • Handle: RePEc:rar:journl:0166

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    1. repec:rtv:ceiswp:121 is not listed on IDEAS
    2. Mariano D'Antonio & Margherita Scarlato, 2000. "Capitale umano e sviluppo economico un modello di equilibrio economico generale per il centro-nord e il mezzogiorno d'Italia," Departmental Working Papers of Economics - University 'Roma Tre' 0016, Department of Economics - University Roma Tre.
    3. Andrea Bassanini & Jørn Henrik Rasmussen & Stefano Scarpetta, 1999. "The Economic Effects of Employment-Conditional Income Support Schemes for the Low-Paid: An Illustration from a CGE Model Applied to Four OECD Countries," OECD Economics Department Working Papers 224, OECD Publishing.
    4. Olivier Bontout & Sébastien Jean, 1998. "Wages and Unemployment: Trade-off Under Different Labour Market Paradigms," Working Papers 1998-13, CEPII research center.
    5. Olivier Bontout & Sébastien Jean, 2000. "What Drove Relative Wages in France? Structural Decomposition Analysis in a General Equilibrium Framework, 1970-1992," Working Papers 2000-03, CEPII research center.
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    More about this item


    Human Capital; Cge Models; Regional Gaps;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy


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