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An Alternative Approach to Testing Dual Labour Market Theory

Author

Listed:
  • Launov, Andrey

    (University of Kent)

Abstract
In this paper we suggest an alternative approach to testing for the dual structure of the labour market. The novelty of the suggested approach is that rather than considering wage determination we concentrate on the turnover. To perform the test we suggest using a latent class count data framework, which allows modelling the turnover in the unobserved primary and secondary markets in the appropriate way. To illustrate the suggested approach we apply our methodology to the German labour market data. Our testing procedure finds no support for the predictions of the dual labour market theory. We also consider the problem of inconclusiveness of the test for involuntary confinement to the secondary market.

Suggested Citation

  • Launov, Andrey, 2004. "An Alternative Approach to Testing Dual Labour Market Theory," IZA Discussion Papers 1289, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1289
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    File URL: https://docs.iza.org/dp1289.pdf
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    References listed on IDEAS

    as
    1. Deb, Partha & Trivedi, Pravin K., 2002. "The structure of demand for health care: latent class versus two-part models," Journal of Health Economics, Elsevier, vol. 21(4), pages 601-625, July.
    2. Dickens, William T & Lang, Kevin, 1985. "A Test of Dual Labor Market Theory," American Economic Review, American Economic Association, vol. 75(4), pages 792-805, September.
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    7. Cain, Glen G, 1976. "The Challenge of Segmented Labor Market Theories to Orthodox Theory: A Survey," Journal of Economic Literature, American Economic Association, vol. 14(4), pages 1215-1257, December.
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    12. Tim Barmby & Michael Nolan & Rainer Winkelmann, 2001. "Contracted Workdays and Absence," Manchester School, University of Manchester, vol. 69(3), pages 269-275, June.
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    14. Andrews, Donald W K, 1988. "Chi-Square Diagnostic Tests for Econometric Models: Theory," Econometrica, Econometric Society, vol. 56(6), pages 1419-1453, November.
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    Cited by:

    1. LEDUC Kristell & GENEVOIS Anne-Sophie, 2012. "Segmentation du marché du travail - le cas luxembourgeois," LISER Working Paper Series 2012-35, Luxembourg Institute of Socio-Economic Research (LISER).
    2. Krzysztof Cybulski, 2019. "Fluktuacja sprzedawcow przyczyny i konsekwencje (Seller fluctuation – causes and consequences)," Research Reports, University of Warsaw, Faculty of Management, vol. 2(31), pages 59-66.
    3. Imran Sarihasan, 2017. "The Gender Differences Of Immigration In Oecd Countries," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 697-706, July.

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    More about this item

    Keywords

    segmented market; dual labour market; count data; latent class model;
    All these keywords.

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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