The Labour Market in CGE Models

Abstract

This paper reviews options of labour market-modelling in a CGE framework. On the labour-supply side, two principal modelling options are distinguished and discussed: aggregated, representative households and microsimulation based on individual household data.On the labour-demand side, we focus on the substitution possibilities between different types of labour in production.With respect to labour-market coordination, we discuss several wage-forming mechanisms and involuntary unemployment. � �