Labor Market Segmentation Research Articles

A high unemployment and labour market segmentation: A three-segment macroeconomic model

Background: South Africa suffers from an unusually high unemployment rate – officially averaging 25% since 1999Q3. In addition, depending on whether one uses the official or broad definitions of unemployment, since 2008 there are on average between 2 and 3.3 times as many unemployed people as there are people in the informal sector. Hence the question: why do the unemployed not enter the informal sector to create a livelihood?Aim: To fill this gap we propose a macro-economic framework that incorporates both formal (primary) and informal (secondary) sectors, as well as involuntary unemployment resulting from entry barriers to the labour market. We believe such a model provides a more suitable basis for macroeconomic policy analysis.Setting: Standard macroeconomic theories at best provide a partial explanation for the South African unemployment problem, focusing mostly on the formal sector.Methods: The article uses a theoretical analysis.Results: The article presents a macro-economic framework that incorporates both formal (primary) and informal (secondary) sectors, as well as involuntary unemployment resulting from entry barriers to the labour market.Conclusion: If the assumptions on which the model draws hold in the South African reality, then a solution to the unem-ployment problem involve policies addressing product and labour market structures and behaviour in the primary sector, as well as policies addressing the numerous barriers to entry, such as borrowing constraints, that poten-tial entrants into the secondary sector face.

Language skills in an ethnically segmented labour market: Estonia 1989–2012

PurposeThe purpose of this paper is to analyse the relationship between skills in the Estonian, Russian and English language, and labour market outcomes in Estonia, a linguistically divided country.Design/methodology/approachThe authors use the Estonian Labour Force Surveys 1992–2012. The authors rely on multivariate linear regression models to document the relationship between language skills and labour market outcomes.FindingsEstonian language knowledge (for ethnic Russians) are important determinants of unemployment. Wage, in contrary, is closely related to English skills. Ethnic Russian men do not earn any premium from speaking Estonian, while women, fluent in Estonian earn approximately 10 per cent more. For ethnic Estonians, Russian fluency is associated with a similar income gain.Research limitations/implicationsDue to the observational nature of the data, the effects reported in this study are not causal effects. As a second limitation, the self-reported language skills data may be imprecise and hence the effects the authors report may be too small.Practical implicationsThe results stress the role of workplace segregation, both along gender and ethnic lines, in determining the individual labour market experience.Originality/valueThe authors provide a comprehensive overview of the effects of language skills in a rapidly developing labour market in a linguistically divided economy. The authors analyse several languages with different legal status and document long-term trends in the effects.

Damian Grimshaw, Colette Fagan, Gail Hebson and Isabel Tavora (Eds), Making Work More Equal: A New Labour Market Segmentation Approach

Damian Grimshaw, Colette Fagan, Gail Hebson and Isabel Tavora (Eds), <i>Making Work More Equal: A New Labour Market Segmentation Approach</i>

How Stable is Labour Market Dualism? Reforms of Employment Protection in Nine European Countries

Labour market segmentation currently is at the forefront of national and European policy debates. While the European Commission and the OECD try to promote what they see as more inclusive policies, academic observers remain skeptical. Particularly the dualisation literature points to stable political economy equilibria that stack the cards against overcoming divisions between labour market insiders and outsiders. Other contributions point to a more dynamic political setting, in which negative feedback effects tend to challenge any 'dualisation consensus'. Against this background, this paper traces recent reform trajectories in a diverse group of European countries that are characterised by a high share of temporary employment: France, Germany, Italy, Netherlands, Poland, Portugal, Slovenia, Spain, and Sweden. Our case studies show that recent reforms of employment regulation are characterised by much more dynamism than one would expect based on the experiences of the two preceding decades - or based on dualisation or insider-outsider theory. The reform trajectories are characterised by rather contradictory approaches, sometimes in close succession. This even includes, in several cases, substantive deregulation of dismissal protection for open-ended contracts.

Skills, Tasks, and Complexity

We introduce a new task-based framework to describe production. It focuses on the fact that certain tasks are too complex for many workers to perform. In such an environment, the relationship between wages of workers may significantly differ from their relative productivities. The labor market partitions itself into submarkets, in which wages and productivity are aligned, and high-skilled workers may obtain wage premia above their productivity level. The framework offers a variety of applications. For instance, the automation of low-complexity tasks tends to reinforce labor market segmentation. Moreover, comparatively small changes in a task's complexity, via new products, processes or automation, may have either a negligible or a large impact on wage inequality.

Segmented Labour Market of Seelampur: A Key Site of Exclusion

If I engage with Muslim manufacturers and we decide a particular date for delivery of the final product, they will deliver the product on time. But after that, they will continuously demand their payment. Since they have large families, their demand is genuine but it becomes hard to work in such an atmosphere. I prefer a comfortable work space and engage with only those with whom I am comfortable in the business. And so, if people of Hindu community are available, I prefer them over Muslims. Manish1

Immigration, Social Networks, and the Emergence of Ethnic Segmentation in a Low-Skill Labor Market

Postwar migration to “western” countries has gone hand in hand with the development of ethnically segmented labor markets, particularly in low-skill roles where entry requirements are minimal. While numerous theories have been forwarded as to why such situations occur, it has remained difficult to empirically test the relative impact of the many interacting processes that produce segmentation in the labor market. In this article, we investigate the processes of ethnic segmentation in low-skilled labor markets, where referral hiring is the norm, with particular reference to the role of ethnically homogeneous social networks and forms of discrimination. We employ an agent-based modeling approach, adapting key elements from Waldinger and Lichter’s widely cited networked explanation of ethnic labor market segmentation. This approach allows us to provide a different lens on theories of ethnic labor market segmentation, investigating the relative impacts of different causal processes that are difficult to investigate in this way using other social science approaches. The overall results from our model indicate that ethnically homogeneous social networks have the effect of increasing the level of ethnic segmentation within a referral-based labor market, but that these networks also help immigrant populations grow and protect them from the negative impacts of employer discrimination. Furthermore, these networks have a greater impact on labor market segmentation than discrimination alone. In conclusion, this sociologically informed agent-based model provides important insights into the manner and extent in which changes in social conditions may affect population-level phenomena.

Labour market segmentation: the economic condition of independent professionals in Italy and Argentina

L’article se centra en les condicions dels treballadors autonoms professionals en els mercats laborals europeus i llatinoamericans, l’augment dels quals esta vinculat al desenvolupament de l’economia de serveis. Fent una critica a la tradicional teoria de segmentacio, aquest grup de treballadors independents altament qualificats, expressio de la classe mitjana alta i del treball postindustrial, es pot considerar a mig cami entre el mercat i la jerarquia, entre la internalitzacio de recursos humans i la subcontractacio. Considerant les desigualtats socials, la pregunta de l’investigador es si les condicions dels professionals independents (es a dir, «autonoms sense empleats» i «professionals per compte propi», caracteritzats per nivells d’educacio mes alts i que treballen en els sectors de serveis avancats) son comparables amb les dels empleats (a Italia i l’Argentina). L’article investiga l’ingres laboral (com a variable dependent) per avaluar com aixo canvia considerant l’ocupacio (autonom o empleat) i les caracteristiques sociodemografiques (com a variables independents). La comparacio dels ingressos es va fer utilitzant dues bases de dades: EPH-INDEC (Encuesta Permanente de Hogares) per a l’Argentina i ITA-SILC per a Italia. Malgrat els problemes de comparacio en la classificacio de les ocupacions, l’analisi destaca les diferencies entre tots dos paisos, vinculades a una expansio dissimil de l’economia de serveis, els serveis professionals i la subcontractacio de competencies altament qualificades. A mes, en condicions de grans desigualtats d’ingressos en l’autoocupacio, els professionals graduats independents a l’Argentina sembla que economicament se’n surten mes be, mentre que a Italia mostren menors ingressos que altres ocupacions, la qual cosa suggereix un impacte desigual en el mercat laboral de l’educacio superior en tots dos paisos.

“Para no estar sin hacer nada”: formación para la inserción laboral de personas inmigrantes en Barcelona

En este artículo nos hemos propuesto analizar las políticas de formación que se dirigen a la inserción laboral de las personas inmigrantes en la ciudad de Barcelona. Sirviéndonos de la propuesta de Chris Shore y Susan Wright (1997) de llevar a cabo una antropología de las políticas, hemos podido reconocer la explicitación de las características ideales que se espera que presenten las personas inmigrantes. Es decir, hemos podido identificar la recurrente solicitud de atenuación o de eliminación de las particularidades culturales, que supuestamente inciden de manera negativa en su inserción laboral, así como también, la recomendación de que se muestren siempre activos en la búsqueda de empleo. De igual modo, hemos podido reconocer los procesos de descalificación de los saberes de las personas inmigrantes y su consecuente “inclusión diferencial” en el segmentado mercado de trabajo.

Exploring regional wage dispersion in Swedish manufacturing, 1860–2009

ABSTRACTEconomic theory predicts that regional wages will converge as transport and communication technologies bring labour markets together. An exploration of this transition from labour market segmentation to unification requires long-term evidence of nominal wages and cost of living by region. This paper presents new evidence of wages for male manufacturing workers and cost-of-living indices across 24 Swedish counties between 1860 and 2009. Our findings indicate that the Swedish regional wage differentials were a great deal larger in the 1860s than in the 2000s. Most of the compression took place between the 1860s and World War I, as well as in the 1930s and during World War II. Differences in expenditures on housing impact on our assessment of convergence in the post-World War II decades: the nominal measure declines, while the real one stays constant. Our concluding discussion engages with the assumption that before World War I, regional wage convergence was associated with labour mobility, spurred by improved communication and transportation technologies as well as by the implementation of modern employment contracts. In the 1930s and 1940s, in contrast, regional wage convergence can be traced to high unionisation and centralised collective bargaining in the labour market, two distinguishing features of the Swedish Model.

When Collective Bargaining Leads to Inequality: Determinants of Two-Tier Provisions in Canadian Collective Agreements

This study examines two-tier provisions—a form of labor segmentation in firms that is increasingly formalized in collective agreements. Drawing on a large population of Canadian collective agreements from the private sector, the authors show that the adoption of these provisions is related more to industrial relations context than to economic uncertainty. Also, depending on whether the two-tier provisions focus on compensation or on job security, their determinants operate dissimilarly. This study contributes to labor market segmentation theory by showing the circumstances under which collective bargaining can marginalize newly hired workers in the primary labor market, namely, weak union power, pressures from sectoral comparisons, employer use of concessionary tactics and, ironically, collective agreements featuring advantageous working conditions.

The matrix of exploitation and temporary employment: Earnings inequality among Inland Southern California's blue-collar warehouse workers

The “just in time” neoliberal global consumer economy has given rise to logistics or “goods movement” hubs, reshaping regional labor markets near port cities, and increasing the demand for temporary blue-collar workers. This article provides a case study of earnings inequality among nonsupervisory warehouse workers in Inland Southern California, most of whom are Latina/o. Combining insights from labor market segmentation and intersectional feminist theories, we argue that employer discrimination against temps has become a significant axis of workplace inequality that interacts with other social inequalities to segment workers into lower and higher paying positions within a complex “matrix of exploitation.” Our statistical analysis uses data from an original survey of workers as well as the American Community Survey to analyze wages, income, and occupational segregation among Inland Southern California's blue-collar warehouse workforce. We find that, controlling for other factors, temporary employment status negatively affects hourly wages and annual earnings. Consistent with the expectations of intersectional feminist theory, the hourly wages of immigrant Latinas, and the annual incomes of immigrant Latinas who are naturalized citizens, were significantly lower than those of all other warehouse workers, controlling for the effects of other factors. Immigrant women were also disproportionately employed as temps and in the lowest paid occupation.

Staying in or switching between permanent, temporary and self-employment during 2008–2010: Associations with changing job characteristics and emotional exhaustion

Labour market segmentation theories suggest that permanent and temporary workers are exposed to economic risks to different degrees, and differ in their working life quality and well-being. However, few studies have tested these ideas during times of economic crisis. Also, little is known about how the self-employed compare to permanent and temporary workers and are affected by economic downturns. This study investigated Swedish workers in different labour market segments before and after the financial crisis (2008 and 2010). More specifically, it looked at job characteristics and strain differences between permanent, temporary and self-employed workers. Data ( N = 6335) came from SLOSH, a longitudinal representative cohort study of the Swedish workforce. Contradicting segmentation theories, differences between permanent and temporary workers were small. The self-employed stood out with favourable job characteristics, but comparable strain levels. During the crisis, work demands and strain declined for many of the workers studied here.

A window of opportunity? Refugee staff’s employment in migrant support and advocacy organizations

ABSTRACT This article presents an analysis of employment trajectories of refugee staff in migrant support and advocacy organisations in the UK, Austria and the Netherlands. In contrast to existing scholarship, it takes refugees’ success in finding employment as a starting point. Moreover, it makes an important contribution to extant literature by identifying the unique features of a niche employment sector for refugees: migrant support organisations. I demonstrate that the mainstream explanatory concepts of ‘labour market segmentation’ and ‘ethnic niche’ fail to capture refugees’ pathway from client to service provider and neglect the sector’s status as a mid- to high-skilled but feminised employment sector. I propose instead to understand ‘refugeeness’ as a form of capital and argue that this capital provides access to employment in migrant support and advocacy organisations, while simultaneously trapping refugees in front-line work with high degrees of hidden, devalued labour and inadequate career mobility.

‘Fits and fancies’: the Taylor Review, the construction of preference and labour market segmentation

AbstractThe Taylor Review asserts that ‘certain groups are also more likely to place a greater importance on flexibility such as carers, women, those with disabilities and older workers’. This article draws upon the experiences of workers on non‐standard contracts to explore the notion of worker preference and to expose how the discourse of work–life balance is usurped to provide justification for flexibility in the interest of employers rather than workers, reconstructing labour market segregation.

Wage Gap in an Ethnically Segmented Labor Market: The Role of Cognitive Skills

We analyzed the ethnic wage gap in Estonia that hosts a large Russian-speaking minority population. We used the Oaxaca-Blinder decomposition to test whether the observed wage gap among the working population is related to commonly unobserved skills. Data from the Estonian Labor Force Survey and the Programme for the International Assessment of Adult Competencies (PIAAC) have been used. We find that the three PIAAC skills combination lowered the estimated unexplained wage differential by approximately 20%. We conclude that the unexplained wage gap is most likely related to entry barriers, combined with low-level segregation and segregated social networks.

Outsorcing of the Domestic Work in Russia: Precarious Employment in Substantive Economy

Domestic labour is a very important part of national economy today. Domestic labour is aimed on reproduction of the labour potential of workers by efforts of a household. Usually domestic labour is realized by members of a particular household. However, in up-to-date economy households usually outsource particular functions of domestic labour outside the household. The most widespread is outsourcing of the domestic labour in the spheres of food preparation, childcare and everyday household services. Domestic labour outsourcing produces the whole segment of labour market aimed at meeting this demand. Employment in this segment is usually precarious and leads to decreasing living standards and developing a considerable sector of shadow economy.The Object of the Study. Outsourcing of the domestic labour in Russia.The Subject of the Study. Practices and directions of domestic labour outsourcing in Russia.The Main Provisions of the Article. Domestic labour consists of work implemented in or for a household. Domestic labour presumes a whole spectrum of life-sustaining activities. Cardinal changes in global economy impel households to take decisions concerning outsource domestic labour. Domestic labour outsourcing in terms of labour market theory is a gig-economy. Gig-economy produces a sphere of employment where a customer and a work performer are connected throughout Internet platforms or apps. This type of employment is characterized either by full absence of contracts or by constrained terms of contracts; by disguised employment or fictitious self-employment; be precarious working conditions such as verbal agreement of remuneration and lack of access to social guarantees and to labour rights protection.

The geography of skill: Mobility and exclusionary unionism in Canada’s north

This paper explores the spatial politics of racism and inter-worker competition through a case study of Indigenous employment during the construction of the Voisey’s Bay mine in northern Labrador. Over the course of construction, the building and construction trades unions (BCTUs) sought to restrict the hiring of local Inuit and Innu workers by challenging the legitimacy of place-based entitlements to work. Inuit and Innu workers had preferential access to employment as a result of unresolved land claims and the ensuing Impact and Benefit Agreements (IBA) between the Voisey’s Bay Nickel Company and both the Innu Nation and the Labrador Inuit Association. IBA provisions that local Inuit and Innu be hired preferentially ran counter to the unions’ organizational structures and cultures, which privileged worker mobility and skill. The BCTUs used the geographic incompatibility between the scale of Indigenous claims and that of construction worker organization to justify a competitive approach to unionism and to veil racist portrayals of Innu and Inuit workers. By drawing out the relation between skill, racism and beliefs about entitlements to work, this paper explores how workers selectively use place-based and mobile identities to participate in inter-worker competition, reifying colonial patterns of labour mobility and labour market segmentation.

Institutional barriers to women’s employment in Saudi Arabia

PurposeThe purpose of this paper is to explore the effectiveness of the Saudi employment programme “Nitaqat” in addressing institutional barriers to women’s employment in the Saudi private sector. The paper has a particular focus on the perspectives of unemployed women as the intended recipients of increased employment opportunities.Design/methodology/approachThis paper adopts a qualitative approach, drawing on findings from face-to-face interviews conducted with two groups of stakeholders, government officials and unemployed Saudi women.FindingsFour key findings are identified. First, the considerable cultural and regulatory barriers of a conservative society are resilient impediments to the success of Saudi employment policy. Second, discrimination against women is endemic in the Saudi society; however, it is largely unrecognised within the Saudi culture and often accepted by women themselves. Third, due to government regulations, cultural constraints and the gendered educational system, the private sector contributes to sustaining labour market segmentation through discriminatory practices. Finally, while a positive change is taking place in Saudi Arabia regarding women’s employment, it is incremental and uneven.Originality/valueThis paper provides new insights into the institutional barriers related to the labour force participation of Saudi women from the perspective of Saudi women themselves.

Public wage spillovers: The role of individual characteristics and employer wage policies

Using a large and unexpected public wage increase in Hungary, which changed the public wage premium from −17 to +7.5% from one month to the next, I study wage spillovers from the public to the corporate sector. I proxy the exposure of corporate workers to the public sector with the variation of the share of public sector employment within labor market segments defined by gender, experience, occupation and region. Controlling for worker-firm joint fixed effects and instrumenting the exposure variable with its past values, I estimate a wage differential of 9.6% around the wage increase between two workers situated at the 25th and the 75th percentile of the exposure measure. The firm's exposure to the public sector (measured as the average of individual exposures of the firm's workforce) produces a wage differential of 13.6%, suggesting that employers are concerned about wage tensions. The spillover affected primarily young, and therefore, mobile, workers and the highly educated, who are abundant in the public sector.