The Effects of Labour Market Reforms upon Unemployment and Income Inequalities: an Agent Based Model

Giovanni Dosi (1) , Marcelo Pereira (2) , Andrea Roventini , Maria Enrica Virgillito (3)

1 LEM - Laboratory of Economics and Management
2 UNICAMP - Universidade Estadual de Campinas = University of Campinas
3 SSSUP - Scuola Universitaria Superiore Sant'Anna [Pisa]

This paper is meant to analyse the e ects of labour market structural reforms by means of an agent-based model. Building on Dosi et al. (2016b) we introduce a policy regime change characterized by a set of structural reforms on the labour market, keeping constant the structure of the capital- and consumption-good markets. Con rming a recent IMF report (Jaumotte and Buitron, 2015), the model shows how labour market structural reforms re- ducing workers' bargaining power and compressing wages tend to increase (i) unemployment, (ii) functional income inequality, and (iii) personal income inequality. We further undertake a global sensitivity analysis on key variables and parameters which con rms the robustness of our findings.

Mots clés: Labor market structural reforms; Income distribution; Inequality; Unemployment; Long run growth

Domaines: Economies et finances

Giovanni Dosi, Marcelo Pereira, Andrea Roventini, Maria Enrica Virgillito. The Effects of Labour Market Reforms upon Unemployment and Income Inequalities: an Agent Based Model. 2016. ⟨hal-03459264⟩