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Community structure and labour market segmentation in a stochastic model of

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  • Davide Fiaschi - Matteo Marsili

Abstract

We analyse an economy where heterogeneous agents are partitioned in communities and individual human capital accumulation, the source of growth, is the joint result of private investment in education, public expenditure and externalities within a community. We characterize the long-run growth rate and the distribution of human capital under alternative specifications regarding community structure, the method to finance public expenditure and labour market. The maximum growth rate is reached for a full integrated economy (just one community). In a stratified economy public expenditure financed by government is preferred to locally financed education. The segmentation of labour market has a negative effect on aggregate growth by decreasing the resources devoted to education

Suggested Citation

  • Davide Fiaschi - Matteo Marsili, 2004. "Community structure and labour market segmentation in a stochastic model of," Computing in Economics and Finance 2004 239, Society for Computational Economics.
  • Handle: RePEc:sce:scecf4:239
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    References listed on IDEAS

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    1. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 255-283.
    2. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer.
    3. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
    4. Marsili, Matteo & Maslov, Sergei & Zhang, Yi-Cheng, 1998. "Dynamical optimization theory of a diversified portfolio," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 253(1), pages 403-418.
    5. Roland BĂ©nabou, 1996. "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, Oxford University Press, vol. 63(2), pages 237-264.
    6. Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-187, June.
    7. Matteo Marsili & Sergei Maslov & Yi-Cheng Zhang, 1998. "Dynamical Optimization Theory of a Diversified Portfolio," Papers cond-mat/9801239, arXiv.org, revised Jan 1998.
    8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    More about this item

    Keywords

    social interactions; human capital; neighbourhood effects; segmented labour market; taxation;

    JEL classification:

    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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