An Agent-Based Computational Approach to Explaining Persistent Spatial Unemployment Disparities

Abstract

This paper explores possible reasons for persistent spatial unemployment disparities using agent-based computational methods. The method relies on observing the actions of thousands of individuals within an artificial society. The paper models the effect of unemployment insurance, wage disparities, region specific amenities and innate residential preferences on regional labour market interactions, accounting for both migration and commuting. An empirical example of Rogaland county in south-west Norway is given, where unemployment disparities have proved remarkably persistent for decades. The model provides non-trivial insight into the nature of spatial unemployment disparities as well as making a valuable contribution to the policy debate.

Congested Interregional Infrastructure, Road Pricing and Regional Labour Markets

“…There is no need to define when people will choose to commute, migrate or enter unemployment, all that is needed is to define utility functions for the individuals. Precise details of the simulation model used in this paper are given in McArthur et al (2008). A very brief outline is given here.…”

“…This is not an unreasonable assumption to make in many contexts. The endogenous wage mechanism which is part of the model can be found in McArthur et al (2008), along with the typical results obtained when using the mechanism. The number of jobs in the system is set to give an unemployment rate of around 5.5%.…”

“…This paper will deal with the problem of modelling the labour market effects of congestion policy by adopting the agent-based computational economics (ACE) approach used by McArthur et al (2008). This approach allows for the simultaneous consideration of commuting, migration and employment status decisions and offers insight into the way they interact.…”