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A Cge Model for Labour Policy Assessment

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  • Margherita Scarlato

Abstract

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
    as

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    References listed on IDEAS

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    3. Redding, Stephen, 1996. "The Low-Skill, Low-Quality Trap: Strategic Complementarities between Human Capital and R&D," Economic Journal, Royal Economic Society, vol. 106(435), pages 458-470, March.
    4. 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.
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    More about this item

    Keywords

    Human Capital; Cge Models; Regional Gaps;
    All these keywords.

    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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