Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/174515 
Year of Publication: 
2016
Series/Report no.: 
LEM Working Paper Series No. 2016/06
Publisher: 
Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM), Pisa
Abstract: 
Wages are an element of cost crucially aecting the competitiveness of individual firms. But the wage bill is also a crucial element of aggregate demand. Hence it could be that more "flexible" and fluid labour markets, while allowing for faster inter-firm reallocation of labour, may also render the whole economic system more fragile, more prone to recession, more volatile. In this work we investigate some conditions under which such a conjecture applies. The paper presents an agent- based model that investigates the effects of two "archetypes of capitalism", in terms of regimes of labour governance - defined by the mechanisms of wage determination, firing, labour protection and productivity gains sharing - upon (i) labour market regularities and (ii) macroeconomic dynamics (long-term rates of growth, GDP uctuations, unemployment rates, inequality, etc..). The model is built upon the "Keynes meets Schumpeter" family of models (Dosi et al., 2010), explicitly incorporating different microfounded labour market regimes. Our results show that seemingly more rigid labour markets and labour relations are conducive to coordination successes with higher and smoother growth.
Subjects: 
Involuntary Unemployment
Aggregate Demand
Wage Determination
Labour Market Regimes
Keynesian Coordination Failures
Agent-Based Models
JEL: 
C63
E02
E12
E24
Document Type: 
Working Paper

Files in This Item:
File
Size
571.17 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.