Labor Market Segmentation, Wage Dispersion and Unemployment

Kevin Lang and William T. Dickens

No 4073, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper briefly reviews the empirical evidence on labor market segmentation and presents some new results on the similarity of the pattern of segmentation across 66 different countries. The paper goes on to consider how unemployment might be understood in a labor market segmentation framework. Existing models of unemployment in a dual labor market suggest that unemployment should be concentrated among those who are ultimately employed in high wage jobs. In fact, unemployment seems to be concentrated among workers who are more likely to be found in low wage jobs. This happens even though at least some workers find low wage jobs easy to obtain, We develop a segmented labor market model capable of explaining these facts and then explore its implications for the aggregate unemployment rate. We find that it fits well with the facts.

Date: 1992-05
Note: LS
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Citations: View citations in EconPapers (9)

Published as William Darity Jr., ed. Labor Economics: Problems in Analyzing Labor Markets. Norwell, MA: Kluwer Academic Publishers, 1993.

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