ETACE Economic Theory and Computational Economics
Prof. Dr. Herbert Dawid
Labour Economics and Search Theory
Herbert Dawid, Philipp Harting, Mariya Mitkova and Anna Zaharieva
Since 1940s, when the field of labour economics was originally established, it has attracted a lot of attention in economic research. There are a number of reasons explaining why labour markets differ from other markets for material goods. First of all, the exchange of labour has a social aspect because individual time and effort are exchanged against a monetary compensation. Second, labour is one of the immobile inputs in the production process and is associated with a problem of asymmetric information, since the individual motivation and ability of the worker are not observed by the potential employer. Furthermore, unemployment persistence, search frictions and wage dispersion contribute to the specific standing of the labour market on the macroeconomic level.
In the field of labour economics research of ETACE members is conducted along two major directions. On the one hand, dynamic labour markets with search frictions are considered in a general equilibrium framework and, on the other, an agent-based approach of computational economics is applied to study large scale labour markets with heterogeneous agents. Macroeconomic models of the labour market are often modeling agents in an oversimplified way, their innate or acquired heterogeneity, memorizing abilities and interdependence of their behavior are rarely taken into account in the traditional literature. ETACE researchers attempt to fill this gap by explicitly considering the implications of asymmetric information between workers and firms, job search through personal contacts and other types of agent attachments and dependencies for such macroeconomic characteristics of the labour market as wage inequality, unemployment dynamics and social welfare. Policy questions in order to eliminate potential welfare inefficiencies and policy design are also in the focus of ETACE researchers.
Ongoing work:
"The Effect of Immigration on the German Labour Market: A Search Equilibrium Approach": Maria Mitkova and Anna Zaharieva in cooperation with Christiane Clemens and Zainab Iftikhar
"The Role of Social Networks and Organizations in the Intergenerational Transmission of Wage Inequality" Herbert Dawid, Philipp Harting and Anna Zaharieva
"Expectations and Social Influence Dynamics in Economics" Herbert Dawid and Anna Zaharieva