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9.5 Stochastic phenomena on the labor market

In comparison with reality the model used so far has the simplification that once the parameters have been defined they have a very determined effect and lead to definite and exact results. For now there is no room for chance.

However, the real processes underlie random scatters. As shown in the previous section, for example, there are discrepancies between actual abilities and your own assessment of these abilities, for a wide variety of reasons. There is only a certain probability that this will lead to correct fluctuation decisions.

In many professions the evaluation of the actual work performance is still influenced by considerable subjective influences. Thus the correlation between performance and received wages continues to contain a random component.

It is possible to introduce stochastic elements into the model and into the corresponding simulation calculation. At first, however, it seemed to me more reasonable to carry out my investigations with the most exact behaviour of the model in order not to obscure the basic behaviour of the model and the objects to be depicted. It must be left to later investigations to take into account stochastic phenomena, which will certainly lead to some interesting findings.

For example, it could be an interesting question to what extent errors in self-assessment lead away from the societal optimum.

Another interesting question is how big wage differences must be in order for voluntary optimizing fluctuations to take place against the effort and risk of changing jobs. A significant role plays the scattering of the objective or perceived correlation between performance and wages, which can be taken into account by introducing stochastic elements. At this point, however, the collaboration of sociologists is also required.

Conclusion: Both ways are to be followed in the future, both with and without consideration of stochastic model elements. At the beginning, deterministic models are preferable because of the better overview.

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