Dual Labor Market Research Articles

Dual returns to experience

In this paper we study how labor market duality affects human capital accumulation and wage trajectories of young workers. Using rich administrative data for Spain, we follow workers since their entry into the labor market to measure experience accumulated under different contractual arrangements and we estimate their wage returns. We document lower returns to experience accumulated in fixed-term contracts compared to permanent contracts and show that this difference is neither due to unobserved firm heterogeneity nor match quality. Instead, we provide evidence that the gap in returns is due to lower human capital accumulation while working under fixed-term contracts. In line with skill-learning complementarity. our results suggest that the widespread use of fixed-term work arrangements reduces skill acquisition of high-skilled workers, holding back life-cycle wage growth by up to 16 percentage points after 15 years since labor market entry.

Dualisation and part-time work in France, Germany and the UK: Accounting for within and between country differences in precarious work

By comparing protections for part-time work in France, Germany and the UK, this article contributes to the comparative debate over whether industrial relations actors are mitigating or creating labour market dualisation. Significant variations in incidence and form of part-time work (a ‘spectrum of precariousness’), between and within the three countries, are explained through a theoretical frame that layers the actions of industrial relations actors against a backdrop of welfare and labour market rules and gender relations. This reveals important path dependent differences in part-time work patterns, including in the lines by which part-time work is segmented. The findings call for a more nuanced approach to dualisation that recognises that trade union responses to precarious work, albeit conditioned by their own path dependencies, have involved active efforts to extend protections to part-timers through twin strategies of support for legislative instruments and new forms of organising, albeit with only partial success.

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.

Labour market dualization and social policy in pandemic times: an in-depth analysis of private consumption services in Europe

PurposeThis article contributes to the debate on how social policies and labour market regulation have been used to limit the socio-economic consequences of the pandemic by focusing on one specific economic segment of European labour markets: private consumption services, such as trade, tourism, catering and other support services.Design/methodology/approachThe analysis combines mixed methods and a variety of sources. First, we built a set of indicators from the EU-LFS microdata for 2019 and the 2018 Eurostat “Structure of earnings survey” and performed a cluster analysis (k-means) on the dimensions and indicators considered. Second, we elaborated EU-LFS data covering 2019 and 2020 (by quarter) and OECD 2020 data, and finally we traced Covid-related policy reforms for the period March 2020–December 2021 and analysed documents and information collected in different policy repositories.FindingsThe paper shows the relevance and characteristics of private consumption services in different countries, demonstrating that so-called labour market “outsiders” are highly represented in this sector and illustrates the policies adopted to respond to the pandemic in different European countries. The paper asks whether this emergency has been a window of opportunity to redefine regulation in this sector, making it more inclusive. It demonstrates, however, that the common approach in Europe has been dominated by temporary, short-term and one-off measures, which do not represent major changes to the social security schemes that were in place before the pandemic.Originality/valueThis article builds on the literature on labour market dualization, but approaches the concept from a different perspective – one not centred on the nature of employment relations (stable/unstable) but on economic sectors/branches. This article does not, therefore, discuss in general terms what happened to labour market outsiders during the pandemic, but rather focus attention on a specific group of workers who are highly exposed to risks stemming from dualization: those employed in the private consumption services. The economic sector perspective is an integrative way of framing dualization which is still under-researched.

Work–family policies and women’s job mobility: emerging divides in female workforce in Japan

ABSTRACT The impact of work–family policies on women’s employment must be considered in the institutional context wherein policies are introduced. This study examines the impact of introducing work–family policies on job exit and change experienced by 25–45-year-old women since the 1990s in the Japanese context. The past three decades are characterised by a deepened labour market duality, continued basic social welfare framework in which labour market position is pivotal for entitlement, and intensified normative familialism. Analyses of panel data from the Japanese Panel Survey of Consumers show that with the development of work–family policies, women become less likely to leave their jobs. This phenomenon is, however, limited to women in regular employment. Mothers with pre-school-age children have not increased their labour market attachment. No change is noted in the tendency of women in regular employment being less likely to change their jobs. Results suggest that work–family policies have not only promoted women’s employment but also brought divides in the female labour force. Additionally, the results indicate the importance of focusing on institutional arrangements to understand how such divides are brought about.

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.

What Role Does EPL Play in Wage Determination under Segmented Labour Markets? A State-level Analysis from India’s Formal Manufacturing Sector

This study explores the role of employment protection legislation (EPL) in wage determination using a state-level panel dataset for India’s formal manufacturing sector. Unlike previous studies, we create a quantitative indicator of EPL using state-wise court judgements (on labour disputes), citing various sections of Chapters 5A and 5B of the Industrial Disputes Act, 1947, particularly those dealing with employment and wage-related legislations. Our findings suggest that pro-worker court judgements specifically on wage-related issues lead to an increase in the share of wages in industrial output. The findings are robust to alternative model specifications. However, we find that the share of wages responds negatively to an increase in pro-worker strictness in the overall EPL. We also analyse the consequences of labour market dualism, which is increasingly becoming a norm even in formal sectors. Using insights from labour market segmentation theory, we argue that a divergence in the regulation between regular and contract labour has a potential to undermine the success of active labour market policies in curbing the ill-effects of market segmentation. JEL Codes: J21, K31

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.

Robots and unions: The moderating effect of organized labour on technological unemployment

This study analyses the moderating effect of union density on industrial employment and unemployment in advanced economies facing exposure to industrial robots. Applying random effects within-between regression models to a pseudo-panel of observations from 27 European countries and the United States over 1998–2019, the study finds that higher union density is associated with a greater decline in industry-sector employment for younger workers and workers with lower secondary education when robot exposure increases. It is also found that the unemployment rate declines more strongly in countries with low union density when robot exposure increases. These findings suggest that exposure to industrial robots promotes labour market dualization in strongly unionized countries, whereas workers with tertiary education and labour market tenure are the main beneficiaries from technological change.

Evaluating the Unequal Economy: Poverty Risk, Economic Indicators, and the Perception Gap

How do citizens form evaluations of the economy? Defining features of advanced capitalism like income inequality and labor market dualization present a challenge for assessing the health of the economy based on a small set of macroeconomic indicators. This is particularly true for those whose proximity to poverty and precarious labor market position is not always reflected in the official unemployment rate. For those individuals, socio-economic segregation and the geographic concentration of poverty mean that information on poverty is more accessible and more salient than information on macroeconomic indicators which needs to be explicitly sought out. Poverty risk thus shapes how individuals evaluate the economy: at-risk individuals are less likely to rely on conventional indicators of growth and unemployment and more likely to allocate attention to the poverty rate. Analyses of public opinion data from 27 countries provide support for this argument. We further show that those at risk of poverty know less about economic performance by standard economic indicators but offer more accurate estimates of national poverty rates. These novel findings underline the need to depart from familiar indicators and address how unequal economies structure preferences and policy responses .

Gender and precarity in platform work: Old inequalities in the new world of work

AbstractPlatform work creates a work model that is both a curse and a blessing for vulnerable labour market segments. Based on research on female precarity, the article expects that remote platform work—so‐called crowdwork—could especially attract women who need to combine income and care responsibilities. This article investigates whether women experience more precarity on crowdwork platforms than men, and why their risks differ. It analyses data from a quantitative survey with crowdworkers in Germany and the United States. The results indicate higher precarity risks for women due to care work, which are also indirectly mediated via the employment status. The higher commodification of labour and weaker social infrastructure lead to generally greater precarity risks for platform workers in the United States. The high differences between women and men in Germany underline the gendered nature of labour market dualization and precarization as well as the traditional division of housework. Policy measures should address both platform work and these structural inequalities.

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.

Inclusive Aging in Korea: Eradicating Senior Poverty.

Poverty for the elderly is one of the most urgent social problems when discussing the social problems facing Korean society. The purpose of this study is to identify the causes of elderly poverty problems and to seek countermeasures. According to a systematic analysis of the economic difficulties of the elderly population that applies a socioecological model, the cause of elderly poverty is complicated by the specificity of the labor market and pension system in Korean society. This is compounded by the lack of a public support system that can overcome insufficient family care and a lack of individual preparation. To alleviate elderly poverty, this paper recommends three policy alternatives. First, a robust multipillar retirement income security system must be established. To secure a minimal retirement income for the elderly in poverty, who have been marginalized from the public pension system design, the basic pension should be raised for the bottom 70% of senior citizens. Second, in order to tackle labor market duality and early retirement, the seniority-oriented wage system should be reformed into a job-based wage system. Third, to minimize unemployment and promote quality among re-employment jobs, the government should strengthen vocational skills development by expanding programs tailored to older people.

Barriers to the effective exploitation of migrants' social and cultural capital in hospitality and tourism: A dual labour market perspective

This article examines migrants' labour market entry experiences and positions in hospitality and tourism from a dual labour market theory standpoint. We conducted thirty interviews with migrants from Latin America, the Middle East, and Sub-Saharan Africa. The transcripts were first analysed through an open coding framework. That was followed by emotion and sentiment analyses for the interviewees' transcripts using Natural Language Processing approach (NLP) with a programming code written in Python. This article found that migrants' high representation in tourism and hospitality is linked to the immense cultural capital they harbour. However, migrants are often at the sector's lower end and fail to build on their social and cultural capital. The research contributes to the understanding that migrants' positions within tourism and hospitality are misaligned with migrants' credentials. Ethnicity impacts job search success and attainment of higher ranks significantly. The underemployment of migrants in hospitality and tourism leads to human capital loss for both migrants and host economies.

Dual Returns to Experience

In this paper we study human capital accumulation and wage trajectories of young workers in a dual labor market. Using rich administrative data for Spain, we follow workers since labor market entry to measure experience accumulated under different contractual arrangements and relate it to current wages. We show that returns to experience accumulated in fixed-term contracts are, on average, lower than the returns to experience acquired in permanent jobs. However, this gap masks significant heterogeneity across individuals. The gap in returns widens along the skill distribution, where workers in the upper tail have the largest difference in returns. Moreover, among equally experienced workers, higher incidence of temporary employment in the past is associated with substantially lower wages. Ultimately, heterogeneous returns to experience translate into significant changes in the position of workers along the distribution of wage growth after 15 years in the labor market, bearing implications for life-cycle wage inequality.

Japan's Stagnant Wages in the Dual Labor Market

Japan's Stagnant Wages in the Dual Labor Market