Heterogeneous Workers, Dualism and Efficiency Wage
AbstractWe consider a segmented labor market characterized by a Shapiro-Stiglitz efficiency wage setting in both sectors. However, the primary sector and the secondary sector differ in the firing cost which induces a wage diffential. We suppose also a heterogeneous labor force characterized by the presence of > and > workers. Only controlled non-shirking workers of the secondary sector can enter in the primary one. This flow of these ones is assimilated to promoted workers. We show that involuntary unemployment emerges at the equilibrium because of efficiency wage setting in both sectors. We argue also that a reduction of the firing cost in the primary sector leads to a lower unemployment of both worker types and raises wage discrimination.
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Bibliographic InfoPaper provided by Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg in its series Working Papers of BETA with number 2000-01.
Date of creation: 2000
Date of revision:
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labor turnover; efficiency wage; primary and secondary sectors;
Find related papers by JEL classification:
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
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- J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
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