Job market paper
'Kaldor Facts' and the Decline of Wage Share: an Agent Based-Stock Flow Consistent Model of Induced Tecnical Change along Classical and Keynesian Lines, Journal of Evolutionary Economics, 31(2): 379-415.
The paper introduces the classical idea about the so-called directed and induced technical change (ITC) within a Keynesian demand-side and evolutionary endogenous growth model in order to analyse the interplay between technical change, long-run economic growth and functional income distribution. The ITC process is analysed within an Agent-Based Stock-Flow Consistent (AB-SFC) model, wherein credit-constrained heterogeneous firms choose both the intensity and the direction of innovation towards a labour- or capital-saving choice of technique. In the long-run, the model reproduces the so-called ‘Kaldor stylised facts’ (i.e. a purely labour-saving technical change process), however during the transitional phase the model shows a labour-saving/capital-using innovation pattern, as the aggregate output-capital ratio decreases until it stabilises in the long-run, and the labour share persistently decline as observed during the last decades in many advanced (and developing) economies.
From a theoretical standpoint, by introducing the classical-fashioned directed innovation mechanism within an evolutionary demand-driven endogenous growth model, the research tries to bridge two different "island empires" (Ruttan, 1997): the directed technical change process and the localised evolutionary innovation dynamics.
Moreover, the model also tries to integrate the idea of directed input-saving technical change process - induced by different paces of wage growth and relative input scarcity ('Habbakkuk hypothesis') - as the main source of declining labour share, with a demand-driven approach. Therefore the main model results can be ascribed to the interplay between directed and biased technical change, the process of wage formation and the dynamics of aggregate demand.
Current research
I am currently working with M. Pereira and M. E. Virgillito on the implementation of an Agent-Based Model aimed at analyzing the roots of long-lasting North-South divergence in terms of GDP, productivity and wages dynamics. We started our research working on the Prin 2017 'Lost highway: skills, technology and trade in Italian economic growth, 1815-2018'. We published three research output.
The first one (Fanti L., Pereira M. C., Virgillito M. E. (2022). The North-South Divide: Sources of Divergence, Policies for Convergence, Journal of Policy Modelling, 45(2): 405-429) proposes a two-region version of the labour-augmented K+S ABM (Dosi et al., 2010, Dosi et al. 2017) to analyse the effects of different policy schemes on the convergence between North and South in Italy.
The second output (Fanti, L., Pereira, M.C., and Virgillito, M.E. (2024). A North-South Agent Based model of segmented labour markets. The role of education and trade asymmetries, Industrial and Corporate Change, 33(2): 383-423) extends the model by introducing public expenditure in education and segmented labour-markets in a two-country framework wherein a North and a South country interact through the international trade of machines. The different education profiles generate asymmetric technological and labour market performance leading to a leader-laggard dynamics.
In the third paper (Fanti, L., Pereira, M.C., and Virgillito, M.E. (2024). The Agents of Industrial Policy and the North-South Convergence: State-Owned Enterprises in an International-Trade Macroeconomic ABM, LEM Working Paper Series, 2024/20) we integrate the model with the international trade of final goods between the two countries and we explicitly model State-Owned Enterprises (SOE) in the South as agents of industrial policies possibly favouring the convergence patterns of the laggard country.