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view/download model file: job_market_and_esogenous_variables.nlogo
The model simulates the interaction between firms and workers in a job market without some specific conditions of perfect competition.In particular firms are price-taking and they have a production function that uses labour as the only productive factor.
Firms have the intent of maximizing their profits and, on the other side, workers move under the simulated world looking for a workplace that has wage offered by firms as the only one element of discrimination.
Workers (turtles) move randomly. If, during their walking, they contact patches who are firms (patches), workers will compare their salary reserve with the wage offered by firms and they'll decide to stop if the wage is compatible with their expectations. In order to distinguish employed and unemployed people the model use two different colours:
- red for people who are looking for a job;
- blue for the employed ones.
Evidently an important element of the model is the absence of perfect information between firms and workers. As a matter of fact turtles don’t know the wage offered in the firm.
Firms have an own production function that explains their possibility to assume workers. In particular, there’re three different kinds of production function differentiated by values of return to scale. A marginal productivity of the firm higher than other ones allows it to employ more workers, but going on with the simulation the model could reach the steady state because gradually firms acquire the same workers’ attraction.
To improve the simulation, on one side, there’s the possibility to introduce a job collective contract equals for all the workers that represents the wage bargaining between the different actors of the job market.
On the other side, observer could decide to give the worker the possibility to reduce his own reserve. In particular a worker knows the unemployment rate present in the market: when it is high, the worker knows it is difficult to find a job and so he is willing to change his preferences. This change follows the unemployment costs: the more he is unemployed, the more he reduce his reserve.
There’re two buttons that control execution of the model:
- SETUP will initialize the simulation, preparing the model to be run;
- GO (it’s a forever button) will run the model.
Before clicking SETUP, set the WORKERSNUMEBER and the FIRMSNUMBER to the desired values. In this way you can determine how many workers and firms are in the model when GO is pressed and workers start moving.
The FIXWAGE slider determines the value of the fix wage, in range [0 ; 10].
CONTRACT determines if in the world there’s a job collective contract or not. This switch could produce some interesting effect in term of market equilibrium.
The SHOW-RESERVE? switch allows to show the salary reserve of any turtles.
The CHANGE-RESERVE? switch creates the possibility to change turtles’ salary reserve.
The MAXWAGE monitor shows the highest wage level in the world, otherwise the MINWAGE monitor shows the lowest one.
EMPLOYED shows the number of employees versus time (blue);
UNEMPLOYMENT-RATE shows the ratio unemployed/workers versus time (red).
If you change a parameter, plots could adjust in a interesting way. So, you can understand what could be the effect into the job market of the introduction, for example, of a collective contract.
Changing the workers’ number, market could have some particular reactions. In fact, linked to this element, the world could join an equilibrium or not.
Try to introduce a contract and use different levels of wage. What happens?
It could be interesting to create, for workers, the possibility to share informations about wages offered by firms or about the last place they were when two or more turtles meet into the model.
BRUCCHI LUCHINO (2001), Manuale di Economia del Lavoro, Il Mulino, Bologna.