Fascinating, compelling, and truly revolutionary, it reveals invaluable lessons for managers in any real-life industry. Real-world labor markets are characterized by highly heterogeneous earnings relative to observable heterogeneity in worker and employer attributes. This study uses an agent-based computational economics model of a labor market to undertake a systematic experimental study of how capacity asymmetries between workers and employers can induce persistent heterogeneity in average earnings and employment histories across workers with initially identical observable structural attributes, and similarly for employers. Particular attention is focused on the experimental determination of correlations between capacity asymmetries and the formation of contractual networks among workers and employers, and between contractual network formation and the types of worksite interactions and earnings outcomes that these contractual networks support. To appear in Computational Economics .
Final version appears as pp.
Preliminary computer experiments are reported which suggest that the standard optimality properties used to judge the desirability of matching mechanisms in static market contexts may be inadequate measures of optimality from an evolutionary perspective. Final version appears as pp.