An Agent-Based Simulation of the Swiss Labour Market : An Alternative for Policy
In this case , they can deal with interventions for the employees ( public employment services , guidance , and support for job search ) or firms ( public sector job creation , incentives to hiring , training subsidies ).
However , active policies are primarily aimed at integrating ( or reintegrating ) into the labor market those who are on the edge of unemployment . The long-term objective , consistent with the previous definition of active policy , is to pursue the most efficient functioning of the labor market , reducing the long-term unemployment .
For many years , this issue and the process through which firms and workers meet in the labor market has been extensively studied and the matching process that affects employment and unemployed dynamics has been a central research topic in labor economics . Most of the literature has tried to explain these phenomena on the grounds of a standard “ toolbox ” based on micro-foundations , which postulate hyper-rational firms and workers : the “ representative individual hypothesis ” is often employed to overcome difficulties entailed by aggregation of heterogeneous agents . Moreover , static equilibrium conditions are largely used to interpret macro-economic dynamics ( Fagiolo , Dosi , & Gabriele , 2004 ).
Following this approach , Active Labor Market Policies ( ALMPs ) are generally analyzed in the context of a macro-economic approach or within a micro-econometric model . The latter is used among many authors ( Kluve , 2010 ). This last paper , based on a data set that includes 137 programs from 19 countries , shows that it is almost exclusively the program type 1 that seems to influence the effectiveness of the program .
A critique of the usual economic analysis of labor markets states , however , that a standard economic approach does not take into account the importance of “ soft skills ” in the labor process . Recent research , indeed , based on empirical findings ( Dawid & Gemkov , 2013 ; Pellizzari , 2011 ; Rebien , 2010 ), highlights that social contacts like friends or relatives , organized in different types of networks ( according to the average number of friends / relatives and the density of the network ) have a substantial impact on the matching process . This view holds that relationships are fundamental to both employers and workers , since they are more likely to apply for jobs where they have a personal connection , and are more likely to be hired if they have , as an example , personality and communication traits , language , personal habits , or interpersonal skills .
Moreover , workers ( and jobs ) are different and require different abilities . As highlighted in the analysis of search policy started by McCall ( 1970 ), only in the simplest job search model the searcher is assumed to know both the distribution of wages for his particular skills and the cost of generating a job offer , and job offers are consequently independent of random selections from the distribution of wages . These offers occur periodically and are either accepted or rejected . Under these conditions , the optimal policy for the job searcher is to reject all offers below a single critical number 2 and to accept any offer above this critical number . However , a searcher in the labor market is clearly concerned not only with the hourly , weekly , or annual wage rate , but also with the anticipated period of employment . If other things are equal , the longer the period of employment , the more favorable the job opportunity is . The job searcher frequently possesses inadequate knowledge about the distribution of wages appropriate to his skills . In this circumstance , it is
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