Économie et Statistique n° 429-430 - Low wages and labour market
Microsimulation and Agent Models: an Alternative Approach to the Assessment of Employment Policies
Analysts routinely use many tools to forecast and measure the effect of employment policies, including macroeconometric models, general-equilibrium models, and ex post assessments on time series or microeconomic data. This article explores an additional approach, mid-way between microsimulation methods and agent-based computational economics (ACE) models. The basic principle consists in describing the behaviour of individual agents, taking into account how they interact with and respond to the changes in the general economic environment. We apply the principle to the dynamic simulation of job creation and destruction, the matching of individuals and jobs, and wage-bargaining behaviour. These processes occur under a profitability constraint and under a potential constraint relating to total demand by type of goods or skills. We calibrate the model to reproduce the main characteristics of unemployment and private-sector paid employment in France, then apply it to the simulation of selected shocks: demographic shock, minimum-wage shock, and social-contribution relief. While still at the prototype stage, the model yields the orders of magnitude obtained with existing approaches, and it offers greater potential for detailed analysis of the effects of the employment policies mentioned. A more elaborate version could therefore be a useful addition to the range of instruments currently available for analyzing the labour market.