A Micro-simulation Model of a Spatial Labor Market

Abstract

We present a model that deals with continuous space and functional regions in the form of overlapping, interacting, and constantly changing contact fields associated with the individual actors in a labor market. Simulations illustrate the results of the model, presenting individual histories of firms and workers. The model demonstrates the importance of the relative location of the firm and the employee in terms of the effort needed to construct functional contact fields. Firms and workers located at either the boundary of the region or in isolated interior positions endure two locational effects: the reduced ability to gather information and to recruit workers due to a truncated or low-density contact field.

In addition to locational effects, acquired skill levels and accumulated tenure with a firm influence the behavior of the workers. Also each firm adopts a production process that reflects a desired level of profit obtainable from a specific class of labor. Firm behavior is assumed to be a function of stress arising in response to a perceived suboptimal profit position relative to other firms.

The aggregation of the individual histories of many firms and workers is used to describe the macro-scale evolution of the spatial pattern of functional contact fields and adopted production processes. The paper concludes with a discussion of the model's limitations and suggested directions for further development.

Key Words:

• Segmented labor markets
• microsimulation modeling
• information fields
• labor migration
• heterogeneous firms and workers