Hysteresis in an Evolutionary Labor Market with Adaptive Search
This study undertakes a systematic experimental investigation of hysteresis (path dependency) in an agent-based computational labor market framework. It is shown that capacity asymmetries between work suppliers and employers can result in two distinct hysteresis effects, network and behavioral, when work suppliers and employers interact strategically and evolve their worksite behaviors over time. These hysteresis effects result in persistent heterogeneity in earnings and employment histories across agents who have no observable structural differences. At a more global level, these hysteresis effects are shown to result in a one-to-many mapping between treatment factors and experimental outcomes. These hysteresis effects may help to explain why excess earnings heterogeneity is commonly observed in real-world labor markets.
KeywordsTrade Cycle Work Offer Utility Level Distance Cluster Final Generation
Unable to display preview. Download preview PDF.
- 3.Blanchard O. L, Summers L. H. (1990) Hysteresis and the European Unemployment Problem. In: Summers L. H. (Ed.) Understanding Unemployment. The MIT Press, Cambridge, MA, 227–285Google Scholar
- 6.McFadzean D. (1995) SimBioSys: A Class Framework for Evolutionary Simulations. MA Thesis, Department of Computer Science, University of Calgary, Alberta, CanadaGoogle Scholar
- 9.Roth A., Sotomayor M. A. O. (1990) Two-Sided Matching: A Study in GameTheoretic Modeling and Analysis. Cambridge University Press, CambridgeGoogle Scholar
- 10.Sargent T. J. (1993) Bounded Rationality in Macroeconomics. Clarendon Press, OxfordGoogle Scholar
- 11.Tesfatsion L. (1995) A Trade Network Game with Endogenous Partner Selection. ISU Economic Report No. 36, April.Google Scholar
- 13.Tesfatsion L. (1997b) How Economists Can Get Alife. In: Arthur W. B., Durlauf S., Lane D. (Eds.) The Economy as an Evolving Complex System, II. Proceedings Volume XXVII, Santa Fe Institute Studies in the Sciences of Complexity. Addison-Wesley, Reading, MA, 533–564Google Scholar
- 14.Tesfatsion L. (1998) Preferential Partner Selection in Evolutionary Labor Markets: A Study in Agent-Based Computational Economics. In: Porto V. W., Saravanan N., Waagen D., Eiben A. E. (Eds.) Evolutionary Programming VII. Proceedings of the Seventh Annual Conference on Evolutionary Programming, Springer-Verlag, Berlin, 15–24Google Scholar
- 15.Yellon J. (1991) Efficiency-Wage Models of Unemployment. In: Mankiw N. G., Romer D. (Eds.) New Keynesian Economics, Volume 2. The MIT Press, Cambridge, MA, 113–122Google Scholar