Modeling the labor market as an evolving institution: model ARTEMIS

Abstract A stylized French labor market is modeled as an endogenously evolving institution. Boundedly rational firms and individuals strive to decrease costs or increase utility. The labor market is coordinated by a search process and decentralized setting of hiring standards, but intermediaries can speed up matching. The model reproduces the dynamics of the gross flows and the spectacular changes in mobility patterns of some demographic groups when the oil crisis in the 1970s occurred, notably the sudden decline of the integration in good jobs. The internal labor markets (ILM) of large firms are shown to increase unemployment if the secondary (temporary or bad) jobs do not exist.

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