Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/173219
Authors: 
Dosi, Giovanni
Pereira, Marcelo C.
Roventini, Andrea
Virgillito, Maria Enrica
Year of Publication: 
2018
Series/Report no.: 
GLO Discussion Paper 168
Abstract: 
In this work we develop a set of labour market and fiscal policy experiments upon the labour and credit augmented "Schumpeter meeting Keynes" agent-based model. The labour market is declined under two institutional variants, the "Fordist" and the "Competitive" set- ups meant to capture the historical transition from the Fordist toward the post "Thatcher- Reagan" period. Inside these two regimes, we study the different effects of supply-side active labour market policies (ALMPs) vs. demand-management passive labour market ones (PLMPs). In particular, we analyse the effects of ALMPs aimed at promoting job search, and at providing training to unemployed people. Next, we compare the effects of these policies with unemployment benefits simply meant to sustain income and therefore aggregate demand. Considering the burden of unemployment benefits in terms of public budget, we link such provision with the objectives of the European Stability and Growth Pact. Our results show that (i) an appropriate level of skills is not enough to sustain growth when workers face adverse labour demand; (ii) supply-side policies are not able to reverse the perverse interaction between exibility and austerity; (iii) PLMPs outperform ALMPs in reducing unemployment and workers' skills deterioration; and (iv) demand-management policies are better suited to mitigate inequality and to improve and sustain long-run growth.
Subjects: 
Industrial-relation Regimes
Flexibility
Active Labour Market Policies
Austerity
Agent-based models
JEL: 
C63
E24
H53
J88
Document Type: 
Working Paper

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