Agent-based models of the labor market

We review the literature on agent-based labor market models by tracing its roots to the microsimulation literature, and surveying a selection of contributions made since the work by Bergmann (1974) and Eliasson (1976). Agent-based models have been applied to explain stylized facts of labor markets as well as for labor market policy evaluations. They also constitute a major part in agent-based macroeconomic models. Besides reviewing the various results achieved, we discuss modeling choices with respect to agents’ behavior and the structure of interaction. Our overall assessment is that agent-based labor market models have given us valuable insights into the functioning of labor markets and the consequences of labor market policies, and that they will increasingly become an essential tool of analysis, in particular when the construction of large macro-models is involved.

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