Competitive and Segmented Labour Markets and Exclusion from Retirement Income
Segmented labour market theory rests on two central tenets. The first is that it is meaningful to distinguish between primary labour markets providing "good" jobs with high wages and stable employment and secondary labour markets providing "bad" jobs with low pay and unstable employment. The second is that jobs in primary labour markets are rationed, with substantial barriers to entry from secondary labour markets. The rationing hypothesis cannot be tested for Ireland with the data available, but here we test the hypothesis that wage determination differs across sectors, using data from a 1987 ESRI household survey. Two formulations of the segmented labour market model are tested, one distinguishing only primary and secondary sectors and the other distinguishing four sectors employed in recent US research by Gordon. Estimating standard earnings functions for both variants suggests that returns to education are lower in secondary markets, as predicted by segmentation theory, but contrary to the theory's predictions returns to work experience do not differ across sectors. There may be a less clear-cut divide between sectors in European countries than in the USA, partly because of the role of trade unions. The policy implications of adopting a segmented labour market perspective are markedly different from those of human capital theory on some central issues of labour market policy, so further investigation of that perspective appears warranted.
|Date of creation:||Jun 1999|
|Contact details of provider:|| Postal: Whitaker Square, Sir John Rogerson's Quay, Dublin 2|
Phone: (353-1) 863 2000
Fax: (353-1) 863 2100
Web page: http://www.esri.ie
More information through EDIRC
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.:
- James M. Poterba & Steven F. Venti & David A. Wise, 1996. "How Retirement Saving Programs Increase Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 91-112, Fall.
- Teresa Ghilarducci, 1992. "Labor's Capital: The Economics and Politics of Private Pensions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262071398, January.
- Schiller, Bradley R & Weiss, Randall D, 1980. "Pensions and Wages: A Test for Equalizing Differences," The Review of Economics and Statistics, MIT Press, vol. 62(4), pages 529-538, November.
- McNabb, Robert & Whitfield, Keith, 1998. "Testing for Segmentation: An Establishment-Level Analysis," Cambridge Journal of Economics, Oxford University Press, vol. 22(3), pages 347-365, May.
- Eric M. Engen & William G. Gale & John Karl Scholz, 1996. "The Illusory Effects of Saving Incentives on Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 113-138, Fall.
When requesting a correction, please mention this item's handle: RePEc:esr:wpaper:wp108. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sarah Burns)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.