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Labor Market Segmentation Theory: Reconsidering the Evidence

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Author Info
William T. Dickens
Kevin Lang

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Abstract

We argue that Labor Market Segmentation theory is a good alternative to standard views of the labor market. Since it is sometimes argued that labor market segmentation theory is untestable, we first consider the uses of theory and the attributes of a good theory. We then argue that labor market segmentation has these attributes. It is internally consistent and is based on plausible assumptions about behavior and technology. More significantly, many of the predictions of the theory have been tested and confirmed. Further, from a dynamic view the theory has done quite well. When the theory has suggested new tests, far more often than not the predictions have been validated. Labor market segmentation theory has had to make little recourse to post-hoc explanations for unexpected empirical results. In contrast, human capital theory has required a series of post-hoc rationalizations to explain a large and growing body of empirical work motivated by the labor market segmentation perspective. Finally, we consider the implications of labor market segmentation theory for the practice of labor economics. We argue that further exploration of the implications of the theory for unemployment, trade. industrial policy and income distribution will provide useful insights and further tests of the theory.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4087.

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Date of creation: Jun 1992
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Handle: RePEc:nbr:nberwo:4087

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Harry J. Holzer & Lawrence F. Katz & Alan B. Krueger, 1988. "Job Queues and Wages: New Evidence on the Minimum Wage and Inter-Industry Wage Structure," NBER Working Papers 2561, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Lang, Kevin & Kahn, Shulamit, 1990. "Efficiency Wage Models of Unemployment: A Second View," Economic Inquiry, Oxford University Press, vol. 28(2), pages 296-306, April.
  3. William T. Dickens & Lawrence F. Katz & Kevin Lang & Lawrence H. Summers, 1989. "Employee Crime, Monitoring, and the Efficiency Wage Hypothesis," NBER Working Papers 2356, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Michael L. Wachter, 1974. "Primary and Secondary Labor Markets: A Critique of the Dual Approach," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 5(1974-3), pages 637-694. [Downloadable!]
  5. Weitzman, Marchin L, 1989. "A Theory of Wage Dispersion and Job Market Segmentation," The Quarterly Journal of Economics, MIT Press, vol. 104(1), pages 121-37, February. [Downloadable!] (restricted)
  6. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June. [Downloadable!] (restricted)
  7. Akerlof, George A, 1984. "Gift Exchange and Efficiency-Wage Theory: Four Views," American Economic Review, American Economic Association, vol. 74(2), pages 79-83, May. [Downloadable!] (restricted)
  8. William T. Dickens & Lawrence F. Katz, 1987. "Interindustry Wage Differences and Industry Characteristics," NBER Working Papers 2014, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Paul Osterman, 1975. "An empirical study of labor market segmentation," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 28(4), pages 508-523, July.
  10. Stiglitz, Joseph E, 1976. "The Efficiency Wage Hypothesis, Surplus Labour, and the Distribution of Income in L.D.C.s," Oxford Economic Papers, Oxford University Press, vol. 28(2), pages 185-207, July. [Downloadable!] (restricted)
  11. Lucifora, Claudio, 1993. "Inter-industry and Occupational Wage Differentials in Italy," Applied Economics, Taylor and Francis Journals, vol. 25(8), pages 1113-24, August.
  12. Alan B. Krueger & Lawrence H. Summers, 1987. "Reflections on the Inter-Industry Wage Structure," NBER Working Papers 1968, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March. [Downloadable!] (restricted)
  14. Schiller, Bradley R, 1977. "Relative Earnings Mobility in the United States," American Economic Review, American Economic Association, vol. 67(5), pages 926-41, December. [Downloadable!] (restricted)
  15. Dickens, William T & Lang, Kevin, 1985. "A Test of Dual Labor Market Theory," American Economic Review, American Economic Association, vol. 75(4), pages 792-805, September. [Downloadable!] (restricted)
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  16. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March. [Downloadable!] (restricted)
  17. Lang, Kevin, 1991. "Persistent Wage Dispersion and Involuntary Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 106(1), pages 181-202, February. [Downloadable!] (restricted)
  18. James P. Smith, 2004. "Career Wage Mobility," Labor and Demography 0403015, EconWPA. [Downloadable!]
  19. Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82. [Downloadable!] (restricted)
  20. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Working Papers 1906, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  21. Oster, Gerry, 1979. "A Factor Analytic Test of the Theory of the Dual Economy," The Review of Economics and Statistics, MIT Press, vol. 61(1), pages 33-39, February. [Downloadable!] (restricted)
  22. Weiss, Andrew W, 1980. "Job Queues and Layoffs in Labor Markets with Flexible Wages," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 526-38, June. [Downloadable!] (restricted)
  23. Dickens, William T & Lang, Kevin, 1988. "Labor Market Segmentation and the Union Wage Premium," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 527-30, August. [Downloadable!] (restricted)
    Other versions:
  24. Heywood, John S, 1991. "Imports and Domestic Wages: Is the Relationship Consistent with Expense Preference Behavior?," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(2), pages 355-72, Fall.
  25. Lazear, Edward, 1979. "The Narrowing of Black-White Wage Differentials Is Illusory," American Economic Review, American Economic Association, vol. 69(4), pages 553-64, September. [Downloadable!] (restricted)
  26. William T. Dickens & Lawrence F. Katz, 1987. "Inter-Industry Wage Differences and Theories of Wage Determination," NBER Working Papers 2271, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  27. Kletzer, Lori Gladstein, 1989. "Returns to Seniority after Permanent Job Loss," American Economic Review, American Economic Association, vol. 79(3), pages 536-43, June. [Downloadable!] (restricted)
  28. Yellen, Janet L, 1984. "Efficiency Wage Models of Unemployment," American Economic Review, American Economic Association, vol. 74(2), pages 200-205, May. [Downloadable!] (restricted)
  29. Rebitzer, James B & Taylor, Lowell J, 1991. "A Model of Dual Labor Markets When Product Demand Is Uncertain," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1373-83, November. [Downloadable!] (restricted)
  30. Lindbeck, Assar & Snower, Dennis J, 1986. "Wage Setting, Unemployment, and Insider-Outsider Relations," American Economic Review, American Economic Association, vol. 76(2), pages 235-39, May.
  31. William T. Dickens & Kevin Lang, 1987. "A Goodness of Fit Test of Dual Labor Market Theory," NBER Working Papers 2350, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  32. Erica L. Groshen, 1988. "Sources of wage dispersion: the contribution of interemployer differentials within industry," Working Paper 8802, Federal Reserve Bank of Cleveland. [Downloadable!]
  33. William T. Dickens & Kevin Lang, 1985. "Testing Dual Labor Market Theory: A Reconsideration of the Evidence," NBER Working Papers 1670, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. William T. Dickens, 1995. "Do Labor Rents Justify Strategic Trade and Industrial Policy?," NBER Working Papers 5137, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Gerard Hughes & Brian Nolan, 1996. "Segmented Labour Markets and Earnings in Ireland," Papers WP075, Economic and Social Research Institute (ESRI). [Downloadable!]
  3. Stephen V. Burks & Jeffrey Carpenter & Lorenz Götte & Kristen Monaco & Kay Porter & Aldo Rustichini, 2007. "Using Behavioral Economic Experiments at a Large Motor Carrier: The Context and Design of the Truckers and Turnover Project," IZA Discussion Papers 2789, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Robert M. Hutchens, . "A Path to Good Jobs? Unemployment and Low Wages: The Distribution of Opportunity for Young Unskilled Workers," Economics Public Policy Brief Archive 11, Levy Economics Institute, The. [Downloadable!]
  5. Christine Siegwarth Meyer & Swati Mukerjee, 2007. "Investigating Dual Labor Market Theory For Women," Eastern Economic Journal, Eastern Economic Association, vol. 33(3), pages 301-316, Summer. [Downloadable!]
  6. Kevin Lang & William T. Dickens, 1992. "Labor Market Segmentation, Wage Dispersion and Unemployment," NBER Working Papers 4073, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Ellingsen, Tore & Rosen, Åsa, 1994. "Skill or Luck? Search Frictions and Wage Differentials," Working Paper Series in Economics and Finance 1, Stockholm School of Economics. [Downloadable!]
  8. María Laura Alzua, 2009. "Are Secondary Workers Informal Workers? Evidence for Argentina," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE. [Downloadable!]
  9. María Laura Alzúa, 2008. "Are Informal Workers Secondary Workers?: Evidence for Argentina," Working Papers 0073, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  10. Krishna Pendakur & Ravi Pendakur, 2002. "Colour My World: Have Earnings Gaps for Canadian-Born Ethnic Minorities Changed Over Time?," Canadian Public Policy, University of Toronto Press, vol. 28(4), pages 489-511, December. [Downloadable!] (restricted)
  11. Stephen V. Burks & Jeffrey Carpenter & Lorenz Goette & Kristen Monaco & Aldo Rustichini & Kay Porter, 2007. "Using Behavioral Economic Field Experiments at a Large Motor Carrier: The Context and Design of the Truckers and Turnover Project," NBER Working Papers 12976, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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