Behavior-based wage dynamics and policy implications

• We are developing a labor dynamics model based on the Labor Discipline Theory.
• Firms and households have incomplete information, and firms have an understanding of household effort response curves captured by neural networks.
• This project is primarily using individual based computational modeling.
• The goal of this project is to explore the consequences of minimum wage, earned income tax credits and universal basic income on firm wages.

References

Bowles, Samuel, and Robert Boyer. “Labor discipline and aggregate demand: a macroeconomic model.” The American Economic Review 78.2 (1988): 395-400.

Akerlof, George A., and Janet L. Yellen. “The fair wage-effort hypothesis and unemployment.” The Quarterly Journal of Economics 105.2 (1990): 255-283.