A Search Model of unemployment and Firm Dynamics

An urn-ball probabilistic model of the labor market is developed. Agents can be employed, (voluntary or involuntary) unemployed or entrepreneurs. The analytical long run equilibrium probabilities for each state and the matching function are derived. Then, the out-of-equilibrium dynamics are investigated through an agentbased simulation, which provides also results on firm demography. The simulation model is finally used to investigate departures from maximizing individual behavior and the effects of more realistic assumptions about profits and the business cycle. 1 

• Type: Journal
• Year: 2004
• Where: ADVCS
• Authors: Matteo Richiardi
• Keywords: ADVCS 2004, Labor Market, Run Equilibrium Probabilities, Urn-ball Probabilistic Model