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The North-South divide: sources of divergence, policies for convergence

Author

Listed:
  • Lucrezia Fanti

    (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italia)

  • Marcelo C. Pereira

    (Institute of Economics, University of Campinas, Campinas, Brazil)

  • Maria Enrica Virgillito

    (Institute of Economics, Scuola Superiore Sant’Anna, Pisa, Italia – Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italia)

Abstract

Building on the labour-augmented K+S framework (Dosi et al., 2010, 2017, 2020), we address the analysis of North-South divide by means of an agent-based model (ABM) endogenously reproducing the divergence between two artificial macro-regions. The latter are characterized by identical initial conditions in terms of productive and innovation structures, but different labour market organizations. We identify the role played by different labour markets functioning on the possible divergence across the two regions, by finding that divergences in labour market reverberate into asymmetric productive performance due to negative reinforcing feedback loop dynamics. We then compare alternative policies by showing that investment schemes aimed at increasing machine renewal and higher substitutionary investment are the most effective in fostering the convergence.

Suggested Citation

  • Lucrezia Fanti & Marcelo C. Pereira & Maria Enrica Virgillito, 2022. "The North-South divide: sources of divergence, policies for convergence," DISCE - Quaderni del Dipartimento di Politica Economica dipe0027, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    • Handle: RePEc:ctc:serie5:dipe0027
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    2. Lucrezia Fanti & Marcelo C Pereira & Maria Enrica Virgillito, 2024. "A North-South Agent–Based Model of segmented labor markets: the role of education and trade asymmetries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(2), pages 383-423.
    3. Reljic, Jelena & Zezza, Francesco, 2024. "Breaking the Divide: Can Public Spending on Social Infrastructure Boost Female Employment in Italy?," GLO Discussion Paper Series 1407, Global Labor Organization (GLO).
    4. Leone Leonida, 2024. "Visualizing Convergence Dynamics across Regions and States: h -Convergence," Mathematics, MDPI, vol. 12(2), pages 1-17, January.
    5. Fanti, Lucrezia & Pereira, Marcelo C. & Virgillito, Maria Enrica, 2024. "The agents of industrial policy and the North-South convergence: State-owned enterprises in an international-trade macroeconomic ABM," GLO Discussion Paper Series 1491, Global Labor Organization (GLO).

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    More about this item

    Keywords

    Agent-Based Models; Technology Gap; Labour Market;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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