Complex Systems and a Computational Social Science Perspective on the Labor Market

Labor market institutions are central for modern economies, and their polices can directly affect unemployment rates and economic growth. At the individual level, unemployment often has a detrimental impact on people’s well-being and health. At the national level, high employment is one of the central goals of any economic policy, due to its close association with national prosperity. The main goal of this thesis is to highlight the need for frameworks that take into account the complex structure of labor market interactions. In particular, we explore the benefits of leveraging tools from computational social science, network science, and data-driven theories to measure the flow of opportunities and information in the context of the labor market. First, we investigate our key hypothesis, which is that opportunity/information flow through weak ties, and this is a key determinant of the length of unemployment. We then extend the idea of opportunity/information flow to clusters of other economic activities, where we expect the flow within clusters of related activities to be higher than within isolated activities. This captures the intuition that within related activities there are more “capitals” involved and that such activities require similar “capabilities.” Therefore, more extensive clusters of economic activities should generate greater growth through exploiting the greater flow of opportunities and information. We quantify the opportunity/information flow using a complexity measure of two economic activities (i.e. jobs and exports). Thesis Supervisor: Alex (Sandy) Pentland Title: Toshiba Professor of Media Arts and Sciences Thesis Supervisor: Olivier de Weck Title: Professor of Aeronautics and Astronautics and Engineering Systems 1 ar X iv :1 60 6. 08 56 2v 1 [ cs .S I] 2 8 Ju n 20 16