Labor Market Segmentation Theory Research Articles

Local Geographies of Labor Market Segmentation: Montréal, Toronto, and Vancouver, 1991

In this paper I use census data to provide an overview of gender, ethnic, and immigrant occupational segmentation in Canada’s three largest metropolitan areas. My findings corroborate the work of many other authors who have shown the pronounced split between female- and male-dominated portions of the labor market. There is also evidence of considerable ethnic and immigrant segmentation, and members of visible minority groups, especially those who are immigrants, are over-represented in poorly paid, vulnerable jobs. However, these patterns are uneven: segmentation takes different forms in the three urban areas examined here. I consider these results in light of human capital and labor market segmentation theory. Each of these approaches—particularly the latter—helps us understand the way capitalist labor markets operate, but the patterns of gender and ethnocultural participation are too complex to be adequately explained by either theory.

Family migration and employment: the importance of migration history and gender.

"This article uses event history data to specify a model of employment returns to initial migration, onward migration, and return migration among newly married persons in the U.S. Husbands are more likely to be full-time employed than wives, and being a parent reduces the employment odds among married women. Employment returns to repeated migration differ by gender, with more husbands full-time employed after onward migration and more wives full-time employed after return migration events. We interpret these empirical findings in the context of family migration theory, segmented labor market theory, and gender-based responsibilities." Data are from the National Longitudinal Survey of Youth from 1979 to 1991.

Dualism in the German Labor Market?A Nonparametric Analysis with Panel Data

Abstract. Orthodoxy in economics gives pride of place to the hypothesis of compensating differentials. Applied to job quality criteria, such as wage levels, job stability, and wage growth, the compensating differentials hypothesis implies that negative or positive job quality characteristics should—ceteris paribus—rarely coincide. Originating in the late 1960s from studies of American inner‐city labor markets, dualist labor market theory has raised doubts about this assumption. At its core, dualist analysis proposes that a dualism exists between a primary' labor market where “jobs possess several of the following traits: high wages, good working conditions, employment stability and job security, equity and due process in the administration of work, and chances for advancement” and a secondary market where jobs “tend to involve low wages, poor working conditions, considerable variability in employment, and little opportunity to advance” (Doeringer and Piore 1971). In the 1980s, there were several attempts to apply dual or segmented labor market theory to European economies, including the German labor market. The mixed findings of these analyses have cast doubt upon the transferability of dualist theory to these contexts.

Testing for segmentation: an establishment-level analysis

It has long been suggested that the industrial structure in Britain is partitioned along core-periphery lines, as posited in segmented labor market theory. Empirical evidence for this proposition, however, has not been strong. In contrast to previous work, this study uses establishment-level data, which is generally recognized to be the most appropriate level of analysis. The results are supportive of a segmentation approach (though the nature of this segmentation is more complex than simple dualist models suggest), but it is shown to be strongly associated with expected outcome variables, particularly those relating to employment stability and low pay.

Do Employers Really Need More Educated Youth?

In this article, the authors use qualitative data from interviews with 51 diverse employers to examine what actions, if any, employers take in pursuit of their stated need for young workers with skills. Contrary to Berg's model, employers often describe a clear need for specific academic skills, specific conditions that require such skills, and costly actions they take to obtain these skills. However, contrary to the economic model, in attempting to achieve productivity goals, employers respond to shortcomings in skills by taking previously unnoted actions that increase labor market stratification. They increase supervisors' responsibility for explaining tasks at considerable cost to themselves, adjust jobs to match workers' skills, offer special accommodations to retain workers with valued skills, and use on-the-job screening and recruiting linkages to select workers. These findings explain some puzzles in segmented labor market theory and extend sociological network models

The Evolution and Demise of the Postwar Concept of Job Quality: an Analysis of Theories of Employment Segmentation

This article traces the evolution and demise of the postwar model of job quality. This model evolved in the context of theories of sheltered employment. It tied assumptions about job quality to the idea that the economy was separable into a stable and unstable segment. Jobs were typically described in terms of a dual structure, in which workers were either employed in the core sector with high employment security and high relative wages or the periphery, where jobs were low paying and unstable. Industrial jobs in large scale mass manufacturing enterprises, in this context, served as a benchmark for individual job quality. When the assumption of a stable sector of the economy became untenable, the concept of labour market shelters was modified and new models which accounted for flexibility in production were developed. This modification process progressively eroded the core of labour market segmentation theory. By the 1990s, both conceptual considerations and empirical evidence dismissed older simplistic concepts of stable demand, and suspended key assumptions about the cumulative nature of job quality. In terms of a Sociology of Knowledge, we witness the gestation and deterioration of an integrated set of economic propositions paralleling real and/or perceived changes in the economic environment.

Gender Differences in Retirement Income:

This study used a sample of retired men and women from the Social Security Administration's Master Beneficiary Record to test theoretical explanations for gender differences in retirement income. We found that although human capital/status attainment, dual economy, and labor-market segmentation theories helped to explain differences in retirement income between men and women, these factors did not totally eliminate the influence of gender on the level of retirement income. Only the family demand factor representing the continuity of marital career substantially reduced the effect of being a woman.Women who were currently and continuously married to the same man received more retirement income than women who had experienced divorce or widowhood.

Changes in the Structure and Quality of Jobs in the United States: Effects by Race and Gender, 1973–1990

Using 17 measures of job quality from the 1980 Census, the Current Population Survey, and the Dictionary of Occupational Titles, the authors perform a cluster analysis that groups 621 jobs covering 94% of the work force into six job categories (termed “contours”), a job classification closely resembling those suggested by labor market segmentation theory. The distribution of employment over the period 1973–90 shifted sharply away from the two middle-quality contours toward the two highest-quality contours. The two lowest-quality contours show no decline in employment share in the 1980s. The declining relative position of employed black and Hispanic men stems from both a worsening job mix relative to white men and a sharp drop in the quality of low-skill jobs. Female workers experienced both a greater shift away from jobs in the lower-quality contours and higher real earnings growth within each job contour than male workers.

New Evidence on the Labor Market Segmentation Hypothesis

Introduction Since the publication of Glenn Cain's article (1976) on the challenge of segmented labor market theory, there have been numerous empirical tests of the effect of segmentation on earnings. A main concern of the segmentation literature has been the question of how to divide the work force among the various segments of the labor market (Taubman and Wachter, 1986). Earlier approaches used individual attributes or human capital characteristics to segment the labor market. However, this approach was shown to be inappropriate because it suffered from truncation bias (Cain, 1976). The estimates were biased because segments were first divided on the basis of high or low income and then used in equations to estimate the rate of return on education (Schervish, 1983). A number of other studies have used industry or product market characteristics to divide the labor market into various segments (Beck, Horan, and Tolbert 1978; Osberg, Apostle, and Clairmont, 1987). An alternative approach has been to use a switching model that estimates a series of earnings functions and a function that estimates the probability of being in the primary labor market (Dickens and Lang, 1985). Anderson, Butler and Sloan (1987) have criticized this approach and alternatively divide the labor market into segments using a hierarchical clustering model with a parametric stopping rule. Another approach has been to use various ranks of occupational prestige to divide the labor market (McNabb and Psacharopoulos, 1981; Neuman and Ziderman, 1986). Most recently, Boston (1990) found evidence to support the labor market segmentation hypothesis. In particular, he found that there are two distinct labor market segments and that a significant portion of the wage differential between segments was unexplained by differences in worker characteristics. However, his results divide the labor market into only two sectors whereas recent literature on labor market segmentation suggests that there may be as many as four distinct segments (Piore, 1975; Edwards, 1979; Gordon, Edwards, and Reich, 1982; and Gordon, 1986). Moreover, Boston derives his two segments using a one dimensional classification scheme and uses only 44 two digit occupations to derive his segments. Using only two segments may result in too much aggregation and hence the loss of important information. The single dimensional classification scheme which uses only a single criterion, whether workers need specific training or skills, also increases the probability of misclassifying workers than a scheme that is multidimensional and uses multiple criteria. For example, using only two segments and a one dimensional criterion results in classifying secretaries, construction workers, and engineers as part of the primary segment. Similarly, all operators, fabricators, and laborers are classified as being in the secondary labor market (Boston, 1990). In contrast, Gordon (1986) suggests using a multidimensional scheme with multiple criteria to establish four distinct labor market segments using industry and occupational classifications at the three digit level. Using Gordon's classification scheme places secretaries, construction workers, and engineers into three distinct segments. Gordon's scheme also places operators, fabricators, and laborers in the automobile industry -- a core industry -- into a subordinate primary sector whereas operators, fabricators, and laborers in the knitting mill industry -- a peripheral industry -- are in the secondary labor market. The purpose of this paper is twofold. First, the hypothesis put forward by the segmented labor market (SLM) model which divides the labor market into an independent professional and technical segment, an independent craft segment, a subordinate primary segment and a secondary segment will be tested. Second, the differentials between segments will be decomposed into a portion that is explained by differences in worker characteristics and a portion that is unexplained by differences in worker characteristics. …

Allocation and wage structure: differences between men and women

In this article allocation to job level and wage rates within job level are analysed in two consecutive steps, with special reference to the differences between men and women. To correct for selectivity bias in the wage equation a correction term based on the multinomial logit model, as proposed by Lee (1983) is used. In both steps factors derived from human capital theory and the segmented labour market theory are allowed to assert their influence. In addition, the relevance of crowding, heterogeneous human capital and personal and familial background is tested. Finally, a comparison is made with earlier, similar research for The Netherlands. This comparison highlights the importance of the connection between age, experience and exposure. Another significant finding is that during the eighties larger firms have become a more attractive option for career-oriented women.

Labour Supply after Childbirth: Do Employers' Policies Make a Difference?

Data from a national survey of new mothers are linked to data from a survey of their pre-birth employers in order to investigate the importance of employer characteristics and policies, relative to women's individual characteristics and circumstances, in determining labour supply outcomes after childbirth. Three labour supply outcomes are examined: returning to work after childbirth, hours of work after returning to work, and choice of employer after the birth. Over the period of time between the birth and whether the mother returned to work (8-9 months), it appeared that women's own characteristics, and the local rate of female unemployment, exerted a stronger influence on drawing women back into employment than did employers' policies. However, employers' retention policies appeared to give women the choice of remaining out of the labour market for longer periods, without risking the penalties usually associated with changing jobs after childbirth. The study finds no evidence to support a suggestion derived from labour market segmentation theory that there will be a distinct patterning in terms of industry or size of the relationship between employers' policies and women's labour supply decisions after childbirth. However, further support is given to the importance of employers' policies in relation to the segmentation of the labour supply.4

Consequences of the Disarmament Process for the Labour Market in Germany

AbstractIn Germany the international peace process has important consequences for the economy, especially for the labour market. The German armed forces will be reduced from 520,000 to 370,000. Nearly three quarters of the approximately 830,000 foreign soldiers stationed in Germany are in the process of leaving the country. Parallel to this there will be a reduction of about 100,000 jobs for civil employees.There are strong indicators showing that the market of civil employees is an “internal market” (of the type often described by labour market segmentation theory) and there are high barriers against the mobility of workers.Measures of active labour market policy (especially of the German Federal Office of Labour) supports the transition of civil workers into new jobs. These provisions are assisted by measures of regional policy in regions with relatively high unemployment rates, where the dissolution and reduction of garrisons affect the prosperity of entire regions. In conglomerates with high growth rates, however, positive consequences of the disarmament process can be expected.

On Formal Education, Skills and Earnings: The Role of Educational Certificates in Earnings Determination

Are diplomas and degrees important for earnings? If so, why? This paper enters the debates on these issues with two important advantages over prior research. First, it conceptualizes and measures formal education in terms of years and certificates. Second, it assesses worker skills directly, independently of both education and earings. This research shows that people with more years of schooling earn more partly because they are more productive. Those with certificates also earn more for this reason. And those with more years and certificates earn more than one would predict from their skills. Finally, women in medical and health occupations ear more for each additional year of schooling if they have a diploma or degree. The first result suggests human capital theory; the second and third point to market signalling or credentialism; and the fourth hints at segmented labour market theory. The enormous importance of educational certificates for earings suggests that market signalling theory is no minor corrective to human capital theory and that other aspects of education may be important for earnings as well. That the economic payoffs to years of education can depend upon diplomas or degrees implies that more than just market signalling theory is required and challenges current conceptions of the economic returns to education.

Labor Market Performance and Regional Types: A Conceptual Framework with Empirical Analysis of Austria

The aim of this article is to shed light on regional differences in labor market performance. Using a cyclical-evolutionary approach, different types of regions with different economic potentials are distinguished. Arguments from segmented labor market theory are used to derive implications for the labor market performance of these regional types. A general pattern for regional labor market performance is developed by analyzing data on the rates, incidence, and duration of unemployment and vacancies for Austria.

Education in Korea: Efficiency vs. Equity

This paper attempts to analyse the effects of education on income distribution in Korea. The human capital theory suggests that an unequal distribution can be reduced by improving the distribution of education because variations in labor income are due to the differences in labor quality in terms of the amount of human capital, especially education, acquired by the workers. On the other hand, a general skepticism about the role of education also can be observed. Thurow, for instance, has shown that in the United States, a country which is a prominent example of educational expansion, schooling has had only a negligible effect in reducing income inequality, although education constitutes one of the key elements in economic growth. Critics of human capital theory, one example is the labor market segmentation theory, asserts that education cannot improve earnings inequality unless other institutional factors, such as occupational earnings structure, are changed. By investigating those two approaches, we can assess whether education can be used as a policy tool to improve the earnings distribution.

Segmented Labor Markets: New Evidence from a Study of Four Race-Gender Groups

Using data from a supplement to the 1983 Current Population Survey, the author tests hypotheses of segmented labor market theory. Two labor market sectors (a primary sector and secondary sector) are identified on the basis of occupational segmentation, as inferred from workers' answers to the question of whether specific skills or prior training were conditions for their employment. The results show significant unexplained earnings differentials across sectors for each of four groups: black men, black women, white men, and white women. Other segmented labor market hypotheses are also generally supported by the results, but distinct variations are found across the four groups.

Market and Network Theories of the Transition from High School to Work: Their Application to Industrialized Societies

The transition from high school to work creates serious problems for American youths and employers. Since single theories have difficulty conceptualizing the reasons for these problems, this paper reviews four theories that elucidate aspects: segmented labor market theory, human capital theory, signaling theory, and network theory. In addition, this review contrasts the American transition system with the transition systems in Japan, West Germany, and the United Kingdom to reveal practices and theoretical issues which are neither salient nor well studied in the American literature. We extend signaling theory to examine youths' use of signals, employers' use of dubious signals (e.g. age) while ignoring promising ones (e.g. grades), signals which are efficient in the short-term but not in the long-term. We extend network theory to include both personal contacts and institutional linkages. We note the ways poor signals may affect youths' plans and motivation and make them unresponsive to market demands, and the ways institutional networks may affect schooling and work-entry in the United States. Implications for theory, policy, and future research are also considered.

Labor Market Segmentation and Job‐Related Risk

Abstract. Labor market segmentation theory calls into question the neoclassical theory of compensating wage differentials, which posits that workers are compensated for job‐related risk. From the perspective of segmentation theory, one would expect secondary workers to experience greater risk on the job with less likelihood of compensation. An empirical examination of worker samples, using discriminant analysis to construct primary and secondary subsamples, reveals that the wages of primary workers vary directly with the probability of job related death, injury and disease. No such relationship holds for secondary workers, who are also shown to experience significantly higher levels of job related risk and disamenity than their primary counterparts.

New Process Technology, Job Design, and Work Organization: A Contingency Model

The introduction of programmable machines into blue-collar machining occupations affords an opportunity to study the conditions under which occupational skill upgrading occurs with technological change. How do workplaces that permit blue-collar occupations to take on programming responsibilities differ from those that do not? This paper presents a contingency model explaining how this choice ofjob design is mediated byfour types of factors: techno-economic forces, internal labor market structures, institutional mechanisms for governing the labor-management relationship, and the organizational context. The data are from a 1986-87 national survey of production managers in a sizestratified random sample of manufacturing establishments in 21 industries. A multivariate logistic regression analysis reveals that the technology and product market alone do not determine job design. The least complex organizations (small plant, small firm) tend to offer the greatest opportunities for skill upgrading, independent of techno-economic conditions a finding at variance with current labor market segmentation theory.

Labor Market Segmentation and Relative Black/White Teenage Birth Rates

"Teenage mothers typically have lower educational attainment than other women. Most observers have argued that this is a major reason for their greater risk of poverty. This article takes the opposite view: that circumstances associated with poverty contribute to a greater likelihood of teenage childbearing. In particular, poor educational quality and the chances of secondary sector employment are more common for black women, regardless of their age at first birth. Hence the payoffs to education may be quite low for these women, which may be the reason for early motherhood. This argument is presented in terms of segmented labor market theory. Data to support it is presented from the [U.S.] National Longitudinal Survey of Youth. Other common explanations of teenage motherhood are critiqued."