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The effects of Labour Market Reforms upon Unemployment and Income Inequalities : an agent based model

Author

Listed:
  • G. Dosi

    (Scuola Superiore Sant'Anna)

  • M.C. Pereira

    (University of Campinas)

  • A. Roventini

    (Scuola Superiore Sant'Anna OFCE Sciences PO)

  • M.E. Virgillito Author-Workplace-Name Scuola Superiore Sant'Anna

Abstract

This paper is meant to analyse the e ects of labour market structural reforms by means of an agent-based model. Building on Dosi et al. (2016b) we introduce a policy regime change characterized by a set of structural reforms on the labour market, keeping constant the structure of the capital- and consumption-good markets. Con rming a recent IMF report (Jaumotte and Buitron, 2015), the model shows how labour market structural reforms reducing workers' bargaining power and compressing wages tend to increase (i) unemployment, (ii) functional income inequality, and (iii) personal income inequality. We further undertake a global sensitivity analysis on key variables and parameters which confirms the robustness of our findings.

Suggested Citation

  • G. Dosi & M.C. Pereira & A. Roventini & M.E. Virgillito Author-Workplace-Name Scuola Superiore Sant'Anna, 2016. "The effects of Labour Market Reforms upon Unemployment and Income Inequalities : an agent based model," Documents de Travail de l'OFCE 2016-24, Observatoire Francais des Conjonctures Economiques (OFCE).
  • Handle: RePEc:fce:doctra:1624
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Dosi, G. & Pereira, M.C. & Roventini, A. & Virgillito, M.E., 2017. "When more flexibility yields more fragility: The microfoundations of Keynesian aggregate unemployment," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 162-186.
    2. Lamperti, Francesco & Roventini, Andrea & Sani, Amir, 2018. "Agent-based model calibration using machine learning surrogates," Journal of Economic Dynamics and Control, Elsevier, vol. 90(C), pages 366-389.
    3. Dosi, Giovanni & Pereira, Marcelo C. & Roventini, Andrea & Virgillito, Maria Enrica, 2018. "What if supply-side policies are not enough? The perverse interaction of flexibility and austerity," GLO Discussion Paper Series 168, Global Labor Organization (GLO).
    4. Tommaso Ciarli & Andre Lorentz & Marco Valente & Mario Savona, 2017. "Structural Changes and Growth Regimes," SPRU Working Paper Series 2017-12, SPRU - Science Policy Research Unit, University of Sussex Business School.
    5. repec:eee:streco:v:44:y:2018:i:c:p:34-45 is not listed on IDEAS
    6. Dosi, Giovanni & Pereira, Marcelo C. & Roventini, Andrea & Virgillito, Maria Enrica, 2017. "Causes and Consequences of Hysteresis: Aggregate Demand, Productivity and Employment," GLO Discussion Paper Series 64, Global Labor Organization (GLO).
    7. Giovanni Dosi & Mauro Napoletano & Andrea Roventini & Joseph E. Stiglitz & Tania Treibich, 2017. "Rational Heuristics? Expectations and Behaviors in Evolving Economies with Heterogeneous Interacting Agents," LEM Papers Series 2017/31, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. Giovanni Dosi & Andrea Roventini & Emanuele Russo, 2017. "Endogenous growth and global divergence in a multi-country agent-based model," LEM Papers Series 2017/32, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    9. repec:spr:italej:v:3:y:2017:i:3:d:10.1007_s40797-017-0065-z is not listed on IDEAS
    10. Giorgio Fagiolo & Mattia Guerini & Francesco Lamperti & Alessio Moneta & Andrea Roventini, 2017. "Validation of Agent-Based Models in Economics and Finance," LEM Papers Series 2017/23, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    11. Giovanni Dosi & Maria Enrica Virgillito, 2016. "In order to stand up you must keep cycling: change and coordination in complex evolving economies," LEM Papers Series 2016/39, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    12. Giovanni Dosi & Andrea Roventini, 2017. "Agent-Based Macroeconomics and Classical Political Economy: Some Italian Roots," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 3(3), pages 261-283, November.

    More about this item

    Keywords

    Labor market structural reforms; Income distribution; Inequality; Unemployment; Long Run Growth;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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