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Evolution of Worker-Employer Networks and Behaviors Under Alternative Non-Employment Benefits: An Agent-Based Computational Study

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  • Leigh Tesfatsion
  • Mark Pingle

Abstract

AbstractThis study experimentally tests the effects of a non-employment payment on work-site behaviors and market efficiency in the context of an agent-based computational labor market model with autonomous strategically-interacting workers and employers. On average, we find that a low but positive non-employment payment is most efficient, especially over the short and intermediate run. A high non-employment payment encourages those who enter employment relationships to be cooperative, but the cost of the non-employment payment program significantly reduces efficiency. Having no non-employment payment encourages the formation of employment relationships, but non-cooperation is common and this reduces efficiency. These “average” results should be viewed with caution, however. Because of strong network and learning effects, quite different paths and ultimate outcomes can result from the same initial structural conditions.
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Suggested Citation

  • Leigh Tesfatsion & Mark Pingle, 2003. "Evolution of Worker-Employer Networks and Behaviors Under Alternative Non-Employment Benefits: An Agent-Based Computational Study," Computing in Economics and Finance 2003 7, Society for Computational Economics.
  • Handle: RePEc:sce:scecf3:7
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    References listed on IDEAS

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    1. Tesfatsion, Leigh, 1998. "Preferential Partner Selection in Evolutionary Labor Markets: A Study in Agent-Based Computational Economics," Staff General Research Papers Archive 4063, Iowa State University, Department of Economics.
    2. Acemoglu, Daron & Pischke, Jorn-Steffen, 2000. "Certification of training and training outcomes," European Economic Review, Elsevier, pages 917-927.
    3. Acemoglu, Daron & Shimer, Robert, 2000. "Productivity gains from unemployment insurance," European Economic Review, Elsevier, pages 1195-1224.
    4. Leigh S. Tesfatsion, "undated". "An Evolutionary Trade Network Game with Preferential Partner Selection," Computing in Economics and Finance 1996 _057, Society for Computational Economics.
    5. Roth, Alvin E. & Sotomayor, Marilda, 1992. "Two-sided matching," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 16, pages 485-541 Elsevier.
    6. McFadzean, David & Tesfatsion, Leigh, 1999. "A C++ Platform for the Evolution of Trade Networks," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 109-134, October.
    7. Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084 Elsevier.
    8. Hamermesh, Daniel S., 1999. "LEEping into the future of labor economics: the research potential of linking employer and employee data," Labour Economics, Elsevier, pages 25-41.
    9. MacLeod, W Bentley & Malcomson, James M, 1998. "Motivation and Markets," American Economic Review, American Economic Association, pages 388-411.
    10. Leigh Tesfatsion, 2002. "Agent-Based Computational Economics," Computational Economics 0203001, EconWPA, revised 15 Aug 2002.
    11. David McFadzean & Deron Stewart & Leigh Tesfatsion, 2000. "A Computational Laboratory for Evolutionary Trade Networks," Computational Economics 0004004, EconWPA.
    12. Tesfatsion, Leigh, 1998. "Preferential Partner Selection in Evolutionary Labor Markets: A Study in Agent-Based Computational Economics," Staff General Research Papers Archive 4063, Iowa State University, Department of Economics.
    13. Lemieux, Thomas & MacLeod, W. Bentley, 2000. "Supply side hysteresis: the case of the Canadian unemployment insurance system," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 139-170, October.
    14. Leigh TESFATSION, 1995. "A Trade Network Game With Endogenous Partner Selection," Economic Report 36, Iowa State University Department of Economics.
    15. MacLeod, W Bentley & Malcomson, James M, 1998. "Motivation and Markets," American Economic Review, American Economic Association, vol. 88(3), pages 388-411, June.
    16. Alvin E. Roth, 2002. "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics," Econometrica, Econometric Society, pages 1341-1378.
    17. Tesfatsion, Leigh, 2001. "Structure, behavior, and market power in an evolutionary labor market with adaptive search," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 419-457, March.
    18. Tesfatsion, Leigh, 1997. "A Trade Network Game with Endogenous Partner Selection," Staff General Research Papers Archive 1680, Iowa State University, Department of Economics.
    19. Acemoglu, Daron & Shimer, Robert, 2000. "Productivity gains from unemployment insurance," European Economic Review, Elsevier, pages 1195-1224.
    20. Matthew Rabin & Joel L. Schrag, 1999. "First Impressions Matter: A Model of Confirmatory Bias," The Quarterly Journal of Economics, Oxford University Press, pages 37-82.
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    Citations

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    Cited by:

    1. Matteo Richiardi, 2003. "The Promises and Perils of Agent-Based Computational Economics," LABORatorio R. Revelli Working Papers Series 29, LABORatorio R. Revelli, Centre for Employment Studies.
    2. Boudreau, James W., 2010. "Stratification and growth in agent-based matching markets," Journal of Economic Behavior & Organization, Elsevier, vol. 75(2), pages 168-179, August.
    3. Richard Freeman, 2005. "Labour market institutions without blinders: The debate over flexibility and labour market performance," International Economic Journal, Taylor & Francis Journals, pages 129-145.
    4. John Duffy & M. Utku Unver, 2003. "Asset Price Bubbles and Crashes with Near-Zero-Intelligence Traders: Towards an Understanding of Laboratory Findings," Computational Economics 0307001, EconWPA, revised 17 Mar 2004.
    5. Christian Martin & Michael Neugart, 2009. "Shocks and Endogenous Institutions: An Agent-based Model of Labor Market Performance in Turbulent Times," Computational Economics, Springer;Society for Computational Economics, vol. 33(1), pages 31-46, February.
    6. Richard B. Freeman, 2007. "Labor Market Institutions Around the World," NBER Working Papers 13242, National Bureau of Economic Research, Inc.
    7. Simon Gemkow & Michael Neugart, 2011. "Referral hiring, endogenous social networks, and inequality: an agent-based analysis," Journal of Evolutionary Economics, Springer, pages 703-719.
    8. Flaminio Squazzoni, 2010. "The impact of agent-based models in the social sciences after 15 years of incursions," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, pages 197-234.
    9. Sandra Silva & Jorge Valente & Aurora Teixeira, 2012. "An evolutionary model of industry dynamics and firms’ institutional behavior with job search, bargaining and matching," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, pages 23-61.
    10. Gerard Ballot & Antoine Mandel & Annick Vignes, 2015. "Agent-based modeling and economic theory: where do we stand?," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, pages 199-220.
    11. Sandra T. Silva & Jorge M. S. Valente & Aurora A. C. Teixeira, 2007. "An evolutionary model of industry dynamics and firms' institutional behavior with job search, bargaining and matching," FEP Working Papers 241, Universidade do Porto, Faculdade de Economia do Porto.
    12. Clemens Kühn & Katja Hillmann, 2016. "Rule-based modeling of labor market dynamics: an introduction," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, pages 57-76.
    13. Gerard Ballot & Antoine Mandel & Annick Vignes, 2015. "Agent-based modeling and economic theory: where do we stand?," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, pages 199-220.
    14. Matteo Richiardi, 2004. "The Promises and Perils of Agent-Based Computational Economics," Computational Economics 0401001, EconWPA.

    More about this item

    Keywords

    Dynamic Job Search and Match Model; Agent-Based Computational Experiments;

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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