The main finding is that job capacity consistently trumps job concentration when it comes to predicting the relative ability of work suppliers and employers to exercise market power. Controlling for job capacity, job concentration has only small unsystematic effects on attained market power levels. It is shown that capacity asymmetries between work suppliers and employers can result in two distinct hysteresis effects, network and behavioral, when work suppliers and employers interact strategically and evolve their worksite behaviors over time. These hysteresis effects result in persistent heterogeneity in earnings and employment histories across agents who have no observable structural differences. These hysteresis effects may help to explain why excess earnings heterogeneity is commonly observed in real-world labor markets.
Final version appears as pp.
Evolutionary Programming VII , Proceedings of the Seventh Annual Conference on Evolutionary Programming, Springer-Verlag, Berlin, 1998. Illustrative computational experiments are reported and interpreted. Final version appears as pp. See the software section, below, for information regarding on-line TNG source code availability. Final version appears as pp.