INTEGRATING ECONOMIC DUALISM AND LABOR MARKET SEGMENTATION:

Although the U.S. economy of the early twenty-first century is vastly different from the U.S. economy prior to the 1970s, the nature of these economic changes and their impact on U.S. workers is unclear. This article claims that despite contemporary economic shifts, differential labor and employer power continues to segment the economy, and workers' position in the labor market continues to predict their rewards, beyond the effects of gender, race, and human capital. Drawing on segmented labor market and dual economy research, we propose a four-category model of the structural factors that influence variance in work-related rewards. We examine the distribution of jobs in each of four categories between 1974 and 2000 and observe that losses and gains across categories are unevenly distributed by race and gender. While white men have experienced the greatest declines in employment and earnings, they have maintained their absolute advantage over women and nonwhites. In multivariate analyses, we find that the structural position of employment continues to be a significant determinant of wages. Although women and racial minorities have experienced sizable increases in employment in primary labor market jobs in the core of the economy, both groups remain overrepresented in low-paying jobs. Moreover women, but not nonwhite men, consistently receive significantly fewer rewards for their labor in both low-paying and high-paying jobs. Our findings suggest that structural factors continue to influence earnings inequality, especially across race and gender lines.     

WOMEN'S RISING MARKET OPPORTUNITIES AND INCREASED LABOR FORCE PARTICIPATION

This paper examines the secular increase in the labor market activity of married women in the United States from 1975 to 1991. The research stresses two findings consistent with the hypothesis that married women increased their attachment to the labor force during this time period. First, increasing duration, not incidence, of married women's employment spells contributes the most to the increase in their rate of employment from 1975 to 1991. Second, the increase in married women's employment over the 1980s is largely due to their increased willingness to work more at any given wage, not their rising wage opportunities. ( JEL J22, J31, J64)     

ROUTINIZATION‐BIASED TECHNICAL CHANGE AND GLOBALIZATION: UNDERSTANDING LABOR MARKET POLARIZATION

There is now ample evidence that jobs and wages have been polarizing at the extremes of the skill distribution since the early 1990s. Possible explanations include, among others, routinization‐biased technical change (technical progress substituting more easily for labor in performing routine rather than nonroutine tasks) and globalization (more specifically, offshore outsourcing by multinational firms). In this article, we develop a unified theoretical general equilibrium model and examine the implications of each competing hypotheses for labor market polarization. (JEL J21, J23, J24, F66)     

LABOR MARKET REGULATION AND THE WINNER'S CURSE

This paper analyzes the impact British Columbia's 1992 Skill Development and Fair Wage Policy (SDFWP) on bid price determination. Econometric analysis of the public school projects tendered between 1989 and 1995 shows that prior to the SDFWP, the common values auction model applied, and bidders facing higher competition surcharged cost estimates in order to avoid the winner s curse. After the SDFWP, collective uncertainty concerning wages declined, and the independent values model became relevant. During this period, bidders responded to rising competition by lowering their bids. This adjustment explains, at least in part, why wage regulation did not raise bid prices. ( JEL D44, J38, L74, H57)     

CONSTRAINED BY HOURS AND RESTRICTED IN WAGES: THE QUALITY OF MATCHES IN THE LABOR MARKET

This paper examines the explicit loss born by workers who face constraints in their working hours by analyzing differences in actual and desired hours and wages. Men tend to be underemployed while women are evenly split between over- and underemployment. Losses in surplus are generally small, but 10% of underemployed men and women experience losses of more than 34% or 50% of surplus, respectively. The loss measure is also an important determinant in predicting labor market transitions, meaning increases in surplus losses generate a higher probability of changing from workers' present jobs or changing the number of hours. ( JEL J22, J41)     

LABOR CONTRACTS AND FLEXIBILITY: EVIDENCE FROM A LABOR MARKET REFORM IN SPAIN

This paper evaluates the effects of a labor market reform in Spain that removed restrictions on fixed‐term or temporary contracts. Our empirical results are based on longitudinal firm‐level data that cover observations before and after the reform. We posit and estimate a dynamic labor demand model with indefinite and fixed‐term labor contracts, and a general structure of labor adjustment costs. Experiments using the estimated model show important positive effects of the reform on total employment (i.e., a 3.5% increase) and job turnover. There is a strong substitution of permanent by temporary workers (i.e., a 10% decline in permanent employment). The effects on labor productivity and the value of firms are very small. In contrast, a counterfactual reform that halved all firing costs would produce the same employment increase as the actual reform, but much larger improvements in productivity and in the value of firms. (JEL J23, J32, J41)     

LABOR MARKET SEGMENTATION AND INCOME DETERMINATION IN POLAND

The model of income determination, as introduced by labor market segmentation students, is applied to Polish data. This article argues that divisions between sectors, industries, branches, and enterprises, imposed institutionally by the Polish central management system, determine dimensions of labor market segmentation in Polish society. Research findings demonstrate a substantive effect of economic segmentation dimensions on income inequalities, with industrial divisions affecting income variation the most strongly. The second stage of anaysis shows substantive differences in the process of income determination between five industries. This article argues that industrial differentials cannot be explained away by differences in labor force composition and that there are substantial variations in how worker characteristics are rewarded. The results are interpreted as evidence of the effect of labor market segmentation on social inequalities in Poland. In addition, differences in structural mechanisms of segmentation between Poland and capitalist societies are noted.     

THE LABOR MARKET IN THE ART SECTOR OF BAROQUE ROME

We analyze the labor market for painters in Baroque Rome using unique data on primary sales of portraits, still lifes, genre paintings, landscapes, and figurative paintings. In line with the traditional artistic hierarchy of genres, average price differentials between them were high. The matched painter‐patron nature of the dataset allows us to evaluate the extent to which price heterogeneity is related to unobservable characteristics of painters and patrons. We find that the market allocated artists between artistic genres to the point of equalizing the marginal return of each genre. Residual price differences at the employer level can be explained in terms of incentive mechanisms to induce effort in the production of artistic quality and compensating wage differentials. (JEL C23, D8, J3, Z11)     

THE LONDON BOMBINGS AND RACIAL PREJUDICE: EVIDENCE FROM THE HOUSING AND LABOR MARKET

This paper investigates the impact of the London bombings on attitudes toward ethnic minorities, examining outcomes in housing and labor markets across London boroughs. We use a difference‐in‐differences approach, specifying “treated” boroughs as those with the highest concentration of Asian residents. Our results indicate that house prices in treated boroughs fell by approximately 2% in the 2 years after the bombings relative to other boroughs, with sales declining by almost 6%. Furthermore, we present evidence of a rise in the unemployment rate in treated compared to control boroughs, as well as a rise in racial segregation. (JEL J15, J71, R21)     

INTERMARRIAGE AND THE LABOR MARKET OUTCOMES OF ASIAN WOMEN

The impact of intermarriage with natives, on labor market outcomes of immigrants, is not homogeneous across ethnic groups. Wages of Asian women are compared with non‐Asians. Both ordinary least squares and instrumental variables estimates of the effects of intermarriage on the wages of Asian women are negative and significant. Non‐Asian women earn a wage premium that becomes insignificant when controls for selection into marriage are introduced. One possible explanation for the intermarriage penalty for Asians is an income effect of having a high‐earning native husband. Intermarriage penalties rise with husband's education. Assimilation patterns of intermarried Asians indicate that they have lower initial wages, market hours, and employment, but exhibit faster rates of growth over their years of stay. The results are robust across Asian subgroups and husband's ethnicity. (JEL J16, J12, J31, J61)     

INTERNATIONAL TRADE AND THE COMPOSITION OF LABOR MARKET TURNOVER

The composition of labor market turnover is shown to influence patterns of international trade. Job and worker turnover have opposing marginal effects on industry export intensity, highlighting the importance of relative turnover shares on either side of the labor market, as opposed to total volumes of labor mobility, in shaping economic outcomes. Industries with relatively greater shares of worker turnover export more of total production, and those with higher job turnover export less. Furthermore, relatively high job turnover hinders industry adjustment following trade liberalization. These predictions receive support for U.S. manufacturing industries using turnover data in the Quarterly Workforce Indicators available from the U.S. Census Bureau. (JEL F16)     

LABOR MARKET SEGMENTATION AND INCOME INEQUALITY IN URBAN CHINA

Though central to the market transition debate, the effect of the institutional realignment on stratification order has not been adequately addressed. I reformulate market transition hypotheses and use data from a recent survey in a Chinese city to test market transition theory and path dependence arguments. I make the linkage between literatures on labor market segmentation and literatures on market transition. I show different returns to human and political capital in the private and state sectors in urban China. My research suggests modifications of the conceptual issues used in the market transition debate.     

SOCIAL ISOLATION AND LABOR MARKET INSULATION:

This study examines the influence of neighborhood poverty and social networks on labor market experiences of less-educated urban job seekers. Data come from the Multi-City Survey of Urban Inequality and the 1990 decennial census. Results indicate that relatively small differences in job search strategies among residents of high- and low-poverty neighborhoods are magnified in the hiring process and that supply- and demand-side factors have qualitatively different effects on earnings within these residential contexts. These results refine our understanding of social isolation by clarifying the points at which "neighborhood effects" manifest themselves in the job-matching process and suggest that social isolation is often accompanied by labor market insulation characterized by an increasing reliance upon neighbors and personal contacts for securing formal employment.     

THE PHYSICIAN LABOR MARKET IN A MANAGED CARE-DOMINATED ENVIRONMENT

The belief that doctors respond to declining demand by treating patients more aggressively has created skepticism about relying on market forces to restructure physician supply. We argue that even if the physician labor market is dysfunctional under fee-for-service incentives, it can perform better as managed care becomes dominant. Our model implies a nonlinear effect of managed care penetration on incomes. Physicians can offset most or all of initial declines in demand, but cannot insulate themselves indefinitely. This may explain the observation that, until recently, the growth of managed care has not been accompanied by large physician income changes. ( JEL III, J31)     

BACK-LOADED WAGES AND ON-THE-JOB TRAINING IN A FRICTIONAL LABOR MARKET

This paper analyzes the coexistence of on-the-job (general) training and on-the-job search in a frictional labor market where firms post skill-dependent labor contracts to preemptively back-load compensation after training. The back-loaded compensation scheme discourages trained workers' efficient job-to-job transition, as if they accumulated relationship-specific capital, which induces overintensified training among more productive firms. The quantitative analysis predicts that the market equilibrium, relative to the efficiency benchmark, gets more skilled workers (training inefficiency) and less output (allocation inefficiency). It further demonstrates that efficiency loss is moderate due to positive externality and can be improved, as search friction is mitigated. (JEL J24, J31, J64)     

DISCONTINUITIES IN PENSION BENEFIT FORMULAS AND THE SPOT MODEL OF THE LABOR MARKET: IMPLICATIONS FOR FINANCIAL ECONOMISTS

In their analysis of corporate pension plans, financial economists typically invoke the simplest and the most tractable model of the labor market. This is the spot model, where the worker's cash wage plus accruing pension benefit equals the value of his marginal product in each and every period. This paper provides evidence against the empirical validity of the spot model, and uses provisions common to most pension plans to do so. These findings are relevant to the appropriate measurement of pension liabilities and thus to the present controversy surrounding the termination of overfunded plans and the recapture of surplus assets by the employer. The existence of incentive effects, ruled out by the spot model, may help to unravel certain well known "puzzles," such as the failure of employers to fully fund their plans in spite of the tax advantages of doing so.     

ENGLISH PROFICIENCY AND LABOR MARKET PERFORMANCE: EVIDENCE FROM THE ECONOMICS PROFESSION

This article investigates whether the global spread of the English language provides an inherent advantage to native English speakers. This question is studied within the context of the economics profession, where the impact of being a native English speaker on future publishing success is examined. English speakers may have an advantage because they are writing in their native language, the quality of writing is a crucial determinant of publishing success, and all the top economics journals are published in English. Using a ranking of the world's top 2.5% of economists, this article confirms that native English speakers are ranked 100 spots higher (better) than similar non‐native English speakers. A variety of extensions examine and dispel many other potential explanations. (JEL A11, J44, F66)     

EMPLOYER RECRUITMENT STRATEGIES AND THE LABOR MARKET OUTCOMES OF NEW HIRES

The results in this article suggest, among other things, a strong association between recruitment choices and starting wages. The theoretical framework motivating the empirical analysis is a wage‐posting game in which firms make wage offers and choose recruitment strategies while recognizing a trade‐off between hiring speed and match quality. Introducing this theoretical framework to the recruitment literature, I present new evidence on employers' choices of recruitment methods to answer the questions “How do employer recruitment choices vary by firm and vacancy characteristics and the skill requirements of jobs?” and “How do vacancy duration and starting wages vary with recruitment choices?”(JEL MS1)     

SOME FACTORS AFFECTING MOBILITY IN THE LABOR MARKET FOR ACADEMIC ECONOMISTS

This study examines the effects of publication, geographic preferences, and institutional preferences on the mobility of academic economists during the period 1955-69. Using a sample of 3813 economists who published at least one article during this period, the analysis indicates that publications do promote upward mobility but to a limited extent. The number of publications rather than their quality promotes mobility, but movement occurs primarily within well-defined geographic regions. The market for academic economists appears to be strongly segmented along geographic lines. Moves within geographic regions tend to be to departments of equal or lesser prestige than the department from which the individual has moved.