Dual Labor Research Articles

The Dual U.S. Labor Market Uncovered

Aggregate U.S. labor market dynamics are well approximated by a dual labor market supplemented with a third, predominantly, home-production segment. We uncover this structure by estimating a Hidden Markov Model, a machine-learning method. The different market segments are identified through (in-)equality constraints on labor market transition probabilities. This method yields time series of stocks and flows for the three segments for 1980-2021. Workers in the primary sector, who make up around 55 percent of the population, are almost always employed and rarely experience unemployment. The secondary sector, which constitutes 14 percent of the population, absorbs most of the short-run fluctuations, both at seasonal and business cycle frequencies. Workers in this segment experience six times higher turnover rates than those in the primary tier and are ten times more likely to be unemployed than their primary counterparts. The tertiary segment consists of workers who infrequently participate in the labor market but nevertheless experience unemployment when they try to enter the labor force. Our individual-level analysis shows that observable demographic characteristics only explain a small part of the cross-individual variation in segment membership. The combination of the aggregate and individual-level evidence we provide points to dualism in the U.S. labor market being an equilibrium division of labor, under labor market imperfections, that minimizes adjustment costs in response to predictable seasonal as well as unpredictable business cycle fluctuations.

Comment on “What Can Students Gain from China's Higher Education?”

Over the past four decades, China has built up one of the largest higher education systems in the world which is no small achievement. The Chinese higher education system is very diverse and complex, and varies a great deal in terms of ease of access for students, the quality of teaching and research, and the returns to education. Therefore, summarizing its progress or the lack of it is a daunting task. Li et al. (2023) offer fresh findings on the returns to higher education in China and their determinants. Their main conclusions are that the returns to college education in China have stabilized after a significant rise and the relatively high returns are largely explained away by signaling and social networks channels as opposed to the human capital mechanism. However, Li et al. (2023) can be improved by talking to the broader Chinese literature and incorporating the institutional details of the higher education sector in China into its analysis. First of all, as Li et al. (2023) rightly point out in the beginning of their paper that the enrollment in Chinese higher education has experienced a 10-fold expansion since 1999 and the resultant system is very diverse and highly stratified. The elite colleges, 211 project colleges, regular 4-year teaching colleges and 3-year vocational colleges operate in utterly different orbits with the elite colleges catching up quickly with the leading universities in the world on many fronts. The expansion concentrated disproportionally on the lower-tier universities, and therefore drove down the returns to an education in these universities as well as the overall returns to higher education to some extent. Another paper coauthored by the lead author of Li et al. (2023), Prof. Hongbin Li, clearly shows that the college premium for young workers declined while the college premium for senior workers increased over the period 1990–2019 (Li et al., 2022). This trend is also evident in work of Chinese scholars, for example, Ding et al. (2012, 2013). Although I understand the sampling is not necessarily representative at the different tiers and further analysis of the four groups of universities may not be possible, the overall conclusion of Li et al. (2023) needs to be qualified. Second, the Chinese labor market is also quite diverse. Dual labor market theory would not adequately capture its complexity. Public sector jobs couple strong stability and high benefits with relatively low nominal salaries. The private sector mostly relies on salaries but leading firms can attract even graduates of elite colleges. Therefore equation (1) in Li et al. (2023) at least needs to control for the sector the graduates landed in. The same goes for the city/region/industries of choice as these greatly shape the kind of work–life balance college graduates will enjoy. Third, while I appreciate the Li et al.'s (2023) efforts to categorize the determinants into the three mechanisms of human capital, social network, and signaling, it might be difficult to pinpoint their independent effects using existing data. For example, it might be premature to draw the conclusion that human capital accumulation in college does not generate the proper returns for students because human capital proxied by the grade point average (GPA) may affect students' long-term socio-economic status through the possibility of securing a spot for graduate school abroad or in China. Li et al.'s (2023) table 3 shows exactly that students who intend to go to graduate school have much higher GPAs. Even among students who enter the labor market immediately upon graduation, their GPAs are somewhat correlated with other variables in the other two dimensions. In particular, when local party organizations consider who to recruit as their member, GPA is definitely one of the criteria. On the social network front, is parental income social capital or economic capital? Other researchers have looked at this question using whether or not parents work in the public sector, whether or not they are party members or whether or not they hold public offices. Parental education is usually used as a measure of cultural capital. Moreover, is a student's score on a college entrance exam a signal or a measure of the student's cumulative human capital prior to college?

The Research on the Relationship between Economic Growth and Unemployment in Spain

Spain’s economy is so volatile that unemployment is extremely high. What’s more, Spain has a dual labor market with many temporary contracts, which contributes to high unemployment. Thus, this study investigates the relationship between unemployment and GDP in Spain by implementing Okun's Law. Using annual data for the period 1972-2021, JMP was used to obtain a simple regression between unemployment rate and GDP and Inflation rate. Empirical results show that GDP is not related to unemployment. However, inflation is related to unemployment. Therefore, Okun’s law cannot be confirmed by Spain, and the lack of GDP does not explain Spain's unemployment problem.

Effect of Korean trade union on wage discrimination between regular and irregular workers

AbstractWhether the dual labor market structure implied by employment type and unionization causes wage discrimination is an intriguing and relevant policy question in the context of South Korea. This study examines the effect of trade unions on wage discrimination against irregular workers by extracting and comparing the ratios of the discriminatory wage gap by employment type between unionized and non‐unionized workplaces. As per the analysis, all generalized decomposition frameworks show that the presence of trade unions expands discrimination regardless of the employment type. In addition, the effects of unionization on the degree of discrimination differ by factors characterized by the dual labor market. The effects are statistically significantly greater for women, youth, service industries, and white‐collar jobs.

Failing Young and Temporary Workers? The Impact of a Disruptive Crisis on a Dual Labour Market

Abstract We study the impact of the pandemic crisis using monthly data covering the universe of individuals registered as unemployed in mainland Portuguese municipalities, complemented with electronic payments, linked employer–employee data, and furlough records. Event study designs identify a sharp increase in unemployment, driven mostly by termination of temporary contracts, and a decrease in new job placements. With triple difference-in-differences, we show that the effects are stronger in more dual municipal labour markets, i.e. with a higher share of temporary jobs, concentrated in young workers and middle educated individuals. The asymmetries are exacerbated by the duality of the municipal labour market.

Impact of international trade under dual labor markets

AbstractA country's unemployment rate can be affected by technology choice and the opening of international trade. This general equilibrium model examines the impact of international trade with the presence of dual labor markets in which manufacturing firms engage in oligopolistic competition and choose technologies with different marginal and fixed costs to maximize profits. In a closed economy, it is shown that an increase in labor market efficiency or a population increase induces manufacturing firms to adopt more advanced technologies and the wage rate in the manufacturing sector increases. With the existence of a continuum of technologies, technology choice is not a source of firm heterogeneity. The opening of international trade leads to an increase in the wage rate in the manufacturing sector and the price of the agricultural good. When countries are identical, international trade always increases national welfare.

Contract Work, a Blessing in Disguise? An Application of the Tenets of the Dual Labour Market Theory

This study aims at investigating the good and bad of contract employment and examines whether there have been changes in the working conditions over time. Specifically, the study explored why people accept contract work and the peculiar emotional challenges they experience due to their employment status. A qualitative research design was employed with data collected through interviews with 34 employees from six financial institutions in Ghana. Thematic analysis revealed that individuals’ reasons for accepting contract work were either for socioeconomic convenience, affective or job-related factors. The emotional challenges experienced by these contract workers were either psychological or social. Another finding that emerged pertained to intrinsic and extrinsic protective factors for the experience of these emotional challenges. These findings imply that although contract workers are more vulnerable and may experience a variety of emotional challenges compared to permanent workers, some of these contract workers consider their jobs a blessing rather than a curse.

Oil price shock and informal workers in dual labor markets

AbstractThis paper examines the impact of a rise in oil prices on the wages of workers in the unorganized sector of a developing economy. The model economy is comprised of two non‐traded transport sectors, formal and informal, along with other sectors. The main results that we obtain are as follows. The informal transport sector contracts when fuel price rises and lowers the real income of the informal workers. The per‐unit return to land rises, and the factor readjustments even raise the output of other sectors in the economy. We also show why inclusion of non‐passenger transport services does not alter the main outcomes of the model.

Monetary Policy, Dual Labor Markets, and Consumption in Japan

Monetary Policy, Dual Labor Markets, and Consumption in Japan

Dual Labor Market in Russian Economic Realities: Indicators and Assessment Methodology in the Context of Modern Challenges

The article systematizes the conditions and consequences of the convergence of the boundaries of two segments of the Russian labor market: the segment of the domestic labor force and the segment of the foreign labor force (labor migrants). The indicators that can be used to assess the impact of this trend on the economy and society are considered. Frequent competitive intersections of migrants and local personnel made it possible to state the limitations in using D. Card's research and M. Piore's theory in assessing the Russian labor market with low incomes. An analysis of the impact of the COVID-19 pandemic and the development of the SMO in Ukraine gives grounds for the conclusion about the further primitivization of the labor market caused by the growth of the foreign segment and the contraction of the domestic labor force’s segment.

Japan's Dual Labor Market and its Macroeconomic Characteristics

Japan's Dual Labor Market and its Macroeconomic Characteristics

구직자의 취업스펙이 실제취업에 미치는 영향에 대한 탐색적 연구

Purpose - The purpose of this study was to examine how job seekers’ spec influence their actual employment especially focusing on the differentiating effects of applicants’ specs depending on whether general or decent job employment.
 Design/methodology/approach - This study conducted analyses on 54,443 samples that incorporated data from the Graduates Occupational Mobility Survey for three years (2017-2019) collected by the Korea Employment Information Service. The linear probability model and logit model were used to examine the research questions.
 Findings - The results analyzed with the hierarchical regression model showed that most job seekers’ specs were statistically significant in predicting employment status. Interestingly, there is a difference between the factors predicting employment for a general job and a decent job. This study suggests academic and practical implications for future research in the selection/ recruitment field by clarifying the critical factors to influence applicants’ employment.
 Research implications or Originality The results of this study follow the screening hypothesis which explains that the applicants’ specs have significant impacts on actual employment. Also, the dual labor market theory, which explains that applicants’ specs differently affect actual employment between general and decent jobs, was reaffirmed.

학원 강사의 일자리 요인이 고용불안정성에 미치는 영향

The purpose of this study was to analyze the effect of tutoring center instructors' job factors on employment insecurity. To this end, an empirical analysis was performed on the employment insecurity of tutoring center instructors based on the dual labor market theory by conducting a survey. In order to achieve the research objectives, a survey was performed with 215 tutoring center instructors with more than one year of teaching experience. The results of analyzing are as follows: first, there was no statistically significant difference in the research subjects' employment insecurity according to their personal factors, while a significant difference was found depending on their professional experience and lecture subjects. Second, the job factors of the tutoring center instructors were found to affect their employment insecurity: employment insecurity was higher in instructors with a lower wage, those working at a smaller institution, and those without employment insurance. In other words, tutoring center instructors who work at a small institute for a low wage without social benefits such as employment insurance show higher employment insecurity. This indicates that the dual structure of the job market is also applied to the occupational group of tutoring center instructors. Therefore, it is necessary to pay more attention to tutoring center instructors working at smaller institutions for a lower wage and to provide expanded employment insurance programs for tutoring centers.

Hiring Temps but Losing Perms? Temporary Worker Inflows and Voluntary Turnover of Permanent Employees

This article investigates the effect of hiring temporary workers on the voluntary turnover of permanent employees. It argues that inflows of temporary workers erode the working conditions of permanent employees, prompting their voluntary departure. Using a unique panel dataset of individual-level monthly payroll data over an eight-year period in a sample of Spanish companies, a positive association between temporary worker inflows and the voluntary turnover of permanent workers is found. The results are robust to diverse specifications and are strongest for firms in non-manufacturing sectors and for firms that hire proportionally more low-skilled workers, contexts where the hiring of temporary workers may be more disruptive for permanent employees. Since the hiring of temporary workers is unlikely to threaten the employment of permanent employees in the dual labour market of Spain, the results indicate serious disruption costs associated with temporary hiring in organisations.

Dual labor market and the “Phillips curve puzzle”: the Japanese experience

Low inflation was once welcomed by both policymakers and the public. However, Japan’s experience during the 1990s changed the consensus of economists and central banks around the world regarding prices. Facing deflation and the zero-interest bound at the same time, the Bank of Japan had difficulty conducting an effective monetary policy, making Japan’s stagnation unusually prolonged. The too-low inflation that concerns central banks today translates into the “Phillips curve puzzle.” In the United States and Japan, in the course of the recovery from the Great Recession after the 2008 Global Financial Crisis, the unemployment rate had steadily declined to a level commonly regarded as lower than the natural rate or NAIRU. However, inflation remained low. In this paper, we consider a minimal model of the dual labor market to jointly investigate how the different factors affecting the structural evolution of the labor market have contributed to the observed flattening of the Phillips curve. We find that the level of bargaining power of workers, elasticity of the supply of labor to wage in the secondary market, and composition of the workforce are the main factors jointly explaining the evidence for Japan.

Notes on economic development in a dual economy: the rise and fall of Brazilian manufacturing industry

Since the second half of 2010, the Brazilian economy is stagnant with negative consequences on productivity and employment growth. We will argue that the loss in economic dynamism is rooted in significant structural changes since the economic opening in the 1990s, resulting in fast deindustrialization and deterioration in the labour market. Our theoretical hypothesis is that of endogenous technical progress. Assuming that it is incorporated in the new machines and equipment, capital accumulation is the key variable to explain. Following early works by Kaldor and Kaldor Mirrlees, we assume that capital accumulation and the incorporation of technical progress are fundamental to promoting structural transformation. However, the presence of a dual labour market may impair the process. Also, as explained by the new developmentalist theory, financial integration of developing economies (a strategy to grow with external savings) in a hierarchial international monetary-financial system imply that real interest rates tend to be high, and the real exchange rate is appreciated, which does not induce accumulation in productive capital. In this case, the economy tends to specialize in its comparative advantages. Early deindustrialization deepens economic heterogeneity and operates as a barrier to increasing aggregate productivity. This is the case of Brazilian economy that failed to develop an endogenous core of technical progress during the fast industrialization process and did not succeed after economic opening either. Duality in the labour market and productivity heterogeneity have been deepened since the 1990s and the Brazilian economy is stagnant.

Segmented and unequal: evidence on the dual labor market and youth unemployment from the Korea youth survey

ABSTRACT Empirical studies of the dual labor market, particularly those employing the endogenous switching regression model, are rare, and few studies appear to have considered youth unemployment, which may have negative long-term effects on economic growth and social equality. Using data from South Korea, we test the proposition that the dual structure of the labor market is one of the main causes that make the youth unemployment rate higher and worsens social inequality. The results strongly support the labor market hypothesis, suggesting that the dual market model is more relevant for the youth labor market; the findings also indicate that the social inequality structure may be strengthened by the dual market structure that excludes youth with socially disadvantaged conditions from the primary labor market.

What does non-standard employment look like in the United States? An empirical typology of employment quality.

Despite significant interest in the changing nature of employment as a critical social and economic challenge facing society-especially the decline in the so-called Standard Employment Relationship (SER) and rise in more insecure, precarious forms of employment-scholars have struggled to operationalize the multifaceted and heterogeneous nature of contemporary worker-employer relationships within empirical analyses. Here we investigate the character and distribution of employment relationships in the U.S., drawing on a representative sample of wage-earners and self-employed from the General Social Survey (2002 - 2018). We use the multidimensional construct of employment quality (EQ), which includes both contractual (e.g., wages, contract type) and relational (e.g., employee representation and participation) aspects of employment. We further employ a typological measurement approach, using latent class analysis, to explicitly examine how the multiple aspects of employment cluster together in modern labor markets. We present eight distinct employment types in the U.S., including one resembling the historical conception of the SER model (24% of the total workforce), and others representing various constellations of favorable and adverse employment features. These employment types are unevenly distributed across society, in terms of who works these jobs and where they are found in the labor market. Importantly, women, those with lower education, and younger workers are more likely to be in precarious forms of employment. More generally, our typology reveals limitations associated with binary conceptions of standard vs. non-standard employment, or insider-outsider dichotomies envisioned within dual labor market theories.

Latin Americans in Switzerland : Dual Citizenship, Gender and Labour Market Incorporation

Since the 1990s, many European and Latin American countries have changed their laws to permit the acquisition of dual citizenship. This shift has accompanied the increase in Latin American migration to Europe and poses new challenges for studies on migrants’ integration, which are often based on nationality. We investigate the labour market incorporation of the Latin American-born population in Switzerland and compare the position of different groups of Latin American-born populations according to their nationality (Latin American, EU27 or Swiss). To do so, we assess the rate of overqualification for each group, separate by sex, and we implement logistic models to evaluate the impact of sociodemographic covariates on the likelihood of being overqualified. The results reflect the Swiss labour market segmentation by both nationality and sex, as the influence of the reason for migration on the labour market incorporation of these groups.

Dual labor market, financial fragility, and deflation in an agent-based model of the Japanese macroeconomy

The paper presents a stock-flow-consistent hybrid macro-agent-based model estimated on Japanese data to study the interdependency among the dual labor market, output, and wage dynamics. By modeling the use of secondary workers as a financial buffer for non-financial firms, the paper investigates the possible impact of uncertainty and financial fragility on inflation and the weakening of the trade off between inflation and unemployment. The paper also contributes to the recent developments in the estimation of agent-based models by presenting an original technique, which relies on the identification and optimization of surrogate models. The numerical results show that the elasticity of firms’ hiring choices to volatility in demand is the main behavioral factor affecting both inflation and the Phillips curve, revealing that uncertainty can have consequences also on prices and not only on real variables as already discussed by the literature. Inflation and Phillips curve are also influenced by the bargaining power of workers and by the indexation of minimum wages, while conventional monetary policy and fiscal policy have limited effects. Unconventional monetary policy can have unintended deflationary consequences, by allowing financially distressed firms, which are more likely to resort to secondary workers, to survive.