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An Empirical Evaluation of an Evolutionary Game Theory Model of the Labor Market

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Listed:
  • Araujo, Ricardo Azevedo
  • Loureiro, Paulo Roberto
  • Souza, Nathalia Almeida

Abstract

In this paper we intend to perform an empirical evaluation of the evolutionary game theory model of the labor market developed by Araujo and Souza (2010). In order to accomplish this task we focus on the Brazilian labor market by using data from the National Household Sampling Survey – PNAD/IBGE, from 1995 to 2008. We used four different methodologies: the OLS, Pseudo-panel with fixed effects, Instrumental Variables and the Heckman Selection Model. Results indicate that the main difference between the 1995-2002 and 2003-2008 period is the impact of education over wages. According to these findings, investments in education were more profitable for the 2003-2008 period. However, all wage gaps between formal and informal markets reduced considerably.

Suggested Citation

  • Araujo, Ricardo Azevedo & Loureiro, Paulo Roberto & Souza, Nathalia Almeida, 2011. "An Empirical Evaluation of an Evolutionary Game Theory Model of the Labor Market," MPRA Paper 30408, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:30408
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    References listed on IDEAS

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    1. Maloney, William F., 2004. "Informality Revisited," World Development, Elsevier, vol. 32(7), pages 1159-1178, July.
    2. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LP, vol. 3(1), pages 1-31, March.
    3. Fortin, Bernard & Marceau, Nicolas & Savard, Luc, 1997. "Taxation, wage controls and the informal sector," Journal of Public Economics, Elsevier, vol. 66(2), pages 293-312, November.
    4. Aureo de Paula & Jose A. Scheinkman, 2006. "The Informal Sector," Levine's Bibliography 122247000000001030, UCLA Department of Economics.
    5. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    6. Loayza, Norman V., 1996. "The economics of the informal sector: a simple model and some empirical evidence from Latin America," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 129-162, December.
    7. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    8. Araujo, Ricardo Azevedo & de Souza, Nathalia Almeida, 2010. "An evolutionary game theory approach to the dynamics of the labour market: A formal and informal perspective," Structural Change and Economic Dynamics, Elsevier, vol. 21(2), pages 101-110, May.
    9. Mulinge, Munyae & Mueller, Charles W., 1998. "Employee job satisfaction in developing countries: The case of Kenya," World Development, Elsevier, vol. 26(12), pages 2181-2199, December.
    10. Enlinson Mattos & Laudo M. Ogura, 2009. "Skill differentiation between formal and informal employment," Journal of Economic Studies, Emerald Group Publishing, vol. 36(5), pages 461-480, September.
    11. Fiess, Norbert M. & Fugazza, Marco & Maloney, William F., 2010. "Informal self-employment and macroeconomic fluctuations," Journal of Development Economics, Elsevier, vol. 91(2), pages 211-226, March.
    12. Loayza, Norman V. & Oviedo, Ana Maria & Serven, Luis, 2005. "The impact of regulation on growth and informality - cross-country evidence," Policy Research Working Paper Series 3623, The World Bank.
    13. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    14. Loayza, Norman V. & Rigolini, Jamele, 2006. "Informality trends and cycles," Policy Research Working Paper Series 4078, The World Bank.
    15. Sachsida, Adolfo & Loureiro, Paulo Roberto Amorim & de Mendonça, Mário Jorge Cardoso, 2004. "Um Estudo Sobre Retorno em Escolaridade no Brasil," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 58(2), April.
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    More about this item

    Keywords

    formal and informal and labor market; evolutionary game theory.;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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