Simulation for labor market using a multi-agent model toward validation of the Amended Labor Contract Act

In 2012, Japan amended its Labor Contract Act (LCA) to ameliorate the employment conditions for fixed-term workers. Unfortunately, the amended law still has a problem, which is known as the refusal to renew employment contracts. This paper argues that the law’s amendment fails to reflect its initial motivation due to a gap between its predicted and its actual effects. We employ a multi-agent system, in which agents autonomously behave as employers and employees. We simulated the amendment’s effect with a multi-agent system that consists of company agents with Q-learning and worker agents. Our experiments clarified that since the LCA was enforced in advance, companies are more likely to hire permanent workers without being swayed by economic trends. We achieved a small economic society through which we examined the source of the economic disparity post-LCA. Our study supports legislation for amendment of such employment laws.