Concentration, capacity and market power in an evolutionary labor market

This paper reports on an experimental study of the relationship between job capacity, job concentration, and market power in the context of an agent-based computational model of a labor market. Job capacity is measured by the ratio of potential job openings to potential work offers, and job concentration is measured by the ratio of work suppliers to employers. For each experimental treatment, work suppliers and employers repeatedly seek preferred work-site partners based on continually updated expected utility, engage in work-site interactions modelled as prisoner's dilemma games, and evolve their work-site behaviors over time. The main finding is that job capacity consistently trumps job concentration when it comes to predicting the relative ability of work suppliers and employers to exercise market power.