IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/1314.html
   My bibliography  Save this paper

A Test of Dual Labor Market Theory

Author

Listed:
  • William T. Dickens
  • Kevin Lang

Abstract

Despite substantial differences in their views of the appropriate policy response to the existence of poverty, neither the proponents of dual market theory nor its critics have proposed potentially conclusive tests of the dual market hypothesis.This paper presents a test of the two central propositions of dual market theory -- 1) the existence of two distinct labor markets with different wage setting mechanisms and 2) the existence of barriers to mobility between the labor markets. We find considerable support for both hypothesis. Estimation of a switching model of wage determination with unknown regimes yields two distinct wage equations. The one which most workers are associated with closely resembles the standard human capital regression with significant returns to education and experience. The other equation is flat with no returns to human capital. These two equations resemble the predictions of dual market theory for the "primary" and "secondary" markets respectively. Further, we present evidence that(at least) some non-white workers are involuntarily confined to the secondary market. This crowding of minority workers into the low wage labor market accounts for a substantial portion of white/non-white wage differences. We interpret these results as providing empirical support for the dual market hypothesis and for recent theoretical work on efficiency wagemodels. In addition, combining the efficiency wage argument with the observation that much of the white/non-white wage difference is explained by the exclusion of non-whites from the primary sector suggests an explanation for the persistance of wage differences.

Suggested Citation

  • William T. Dickens & Kevin Lang, 1984. "A Test of Dual Labor Market Theory," NBER Working Papers 1314, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1314
    Note: LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w1314.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. William T. Dickens, 1983. "The Effect of Company Campaigns on Certification Elections: Law and Reality Once Again," ILR Review, Cornell University, ILR School, vol. 36(4), pages 560-575, July.
    2. 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.
    3. 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 526-538, June.
    4. Piore, Michael J, 1983. "Labor Market Segmentation: To What Paradigm Does It Belong?," American Economic Review, American Economic Association, vol. 73(2), pages 249-253, May.
    5. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    6. Elie Appelbaum & Chin Lim, 1981. "Ex Ante and Ex Post Firms and Equilibrium Price Fluctuations," University of Western Ontario, Departmental Research Report Series 8118, University of Western Ontario, Department of Economics.
    7. Duane E. Leigh, 1976. "Occupational Advancement in the Late 1960s: An Indirect Test of the Dual Labor Market Hypothesis," Journal of Human Resources, University of Wisconsin Press, vol. 11(2), pages 155-171.
    8. Ernst R. Berndt & Bronwyn H. Hall & Robert E. Hall & Jerry A. Hausman, 1974. "Estimation and Inference in Nonlinear Structural Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 4, pages 653-665, National Bureau of Economic Research, Inc.
    9. Paul Osterman, 1975. "An Empirical Study of Labor Market Segmentation," ILR Review, Cornell University, ILR School, vol. 28(4), pages 508-523, July.
    10. Stanley J. Liebowitz & Stephen E. Margolis, 1981. "A Comment on Ordover and Willig's "On the Optimal Provision of Journals qua Sometimes Shared Goods"," University of Western Ontario, Departmental Research Report Series 8109, University of Western Ontario, Department of Economics.
    11. Kahn, Shulamit, 1987. "Occupational Safety and Workers Preferences: Is There a Marginal Worker?," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 262-268, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kevin Lang & William T. Dickens, 1987. "Neoclassical and Sociological Perspectives on Segmented Labor Markets," NBER Working Papers 2127, National Bureau of Economic Research, Inc.
    2. repec:eee:labchp:v:2:y:1986:i:c:p:1183-1217 is not listed on IDEAS
    3. William T. Dickens & Kevin Lang, 1992. "Labor Market Segmentation Theory: Reconsidering the Evidence," NBER Working Papers 4087, National Bureau of Economic Research, Inc.
    4. Russell Cooper, 1984. "Insurance, Flexibility and Non-contingent Trades," Cowles Foundation Discussion Papers 691, Cowles Foundation for Research in Economics, Yale University.
    5. Allen, Joyce E. & Davis, Carlton G. & Evans, Sidney H. & Huffman, Wallace E. & Jones, Dewitt & Nelson, Mack C. & Park, Alfred L. & Robbins, Richard D., 1986. "Opportunities And Status Of Blacks In The Agricultural Economics Profession," 1986 Annual Meeting, July 27-30, Reno, Nevada 278435, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. 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.
    7. James P. Smith, 2004. "Career Wage Mobility," Labor and Demography 0403015, University Library of Munich, Germany.
    8. Alessio Emanuele Biondo & Roberto Cellini & Tiziana Cuccia, 2020. "Choices on museum attendance: An agent‐based approach," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 882-897, November.
    9. Trung X. Hoang & Nga V. T. Le, 2021. "Natural disasters and risk aversion: Evidence from Vietnam," Natural Resources Forum, Blackwell Publishing, vol. 45(3), pages 211-229, August.
    10. Michelle Sheran Sylvester, 2007. "The Career and Family Choices of Women: A Dynamic Analysis of Labor Force Participation, Schooling, Marriage and Fertility Decisions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(3), pages 367-399, July.
    11. Thunström, Linda & Nordström, Jonas & Shogren, Jason F., 2015. "Certainty and overconfidence in future preferences for food," Journal of Economic Psychology, Elsevier, vol. 51(C), pages 101-113.
    12. Robert Kaestner, 1995. "The Effects of Cocaine and Marijuana Use on Marriage and Marital Stability," NBER Working Papers 5038, National Bureau of Economic Research, Inc.
    13. Ellis Scharfenaker, Markus P.A. Schneider, 2019. "Labor Market Segmentation and the Distribution of Income: New Evidence from Internal Census Bureau Data," Working Paper Series, Department of Economics, University of Utah 2019_08, University of Utah, Department of Economics.
    14. Carl Christian von Weizsäcker, 2011. "Homo Oeconomicus Adaptivus – Die Logik des Handelns bei veränderlichen Präferenzen," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2011_10, Max Planck Institute for Research on Collective Goods.
    15. Capps, Oral Jr. & Havlicek, Joseph Jr., 1980. "National And Regional Household Demands For Meats And Seafood In The U.S.: A Complete Systems Approach," 1980 Annual Meeting, July 27-30, Urbana-Champaign, Illinois 278409, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Kanazawa, Satoshi, 2005. "Is "discrimination" necessary to explain the sex gap in earnings?," Journal of Economic Psychology, Elsevier, vol. 26(2), pages 269-287, April.
    17. Delis, Manthos & Savva, Christos & Theodossiou, Panayiotis, 2020. "A Coronavirus Asset Pricing Model: The Role of Skewness," MPRA Paper 100877, University Library of Munich, Germany.
    18. Dhaval M. Dave, 2013. "Effects of Pharmaceutical Promotion: A Review and Assessment," NBER Working Papers 18830, National Bureau of Economic Research, Inc.
    19. Faruk, Balli, 2006. "New Patterns in International Portfolio Allocation and Income Smoothing," MPRA Paper 10121, University Library of Munich, Germany, revised 14 Aug 2008.
    20. Koutmos, Dimitrios, 2012. "An intertemporal capital asset pricing model with heterogeneous expectations," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(5), pages 1176-1187.
    21. Adama Zerbo, 2006. "Marché du crédit et travail décent au Burkina Faso," Documents de travail 133, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1314. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.