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Given that the supply of scientific personnel is inelastic, the expansion of public research may negatively influence private research by driving up the wage of scientific personnel and reallocating them away from private sectors. China's massive college expansion since 1999 and labor market segmentation provide us with a unique opportunity to investigate such a reallocation effect on firm innovation. Consistent with the reallocation hypothesis, we find that China's college expansion negatively influenced firm innovation as well as regional innovation in the short run. Moreover, we provide direct evidence on scientific personnel reallocation by finding that when college expansion was more intensive, highly educated laborers were less likely to choose an industrial job, and those working in industries enjoyed a higher wage rate when holding a professional (research related) job.

I study how the density of executive labor markets affects managerial incentives and thereby firm performance. I find that U.S. executive markets are locally segmented rather than nationally integrated, and that the density of a local market provides executives with non-compensation incentives. Empirical results show that in denser labor markets, executives face stronger performance-based dismissal threats as well as better outside opportunities. These incentives result in higher firm performance in denser markets, especially when executives have longer career horizons. Using state-level variation in the enforceability of covenants not to compete, I find that the positive effects of market density on incentive alignment and firm performance are stronger in markets where executives are freer to move. This evidence further supports the argument that local labor market density works as an external incentive alignment mechanism.

This paper explores the influence of labor market segmentation by industry sectors on the wage gap between rural-to-urban migrants and local urban residents in China in the 2000s. Using Chinese Household Income Project (CHIP) survey data and the results based on the Brown decomposition method, the results indicate that the influence of intra-industrial differentials is greater than the influence of inter-industry differentials in both 2002 and 2013. The influence of the explained component of the intra-industry differentials is larger in both 2002 and 2013, and the influence of the unexplained component of the intra-industrial differentials rises steeply from 2002 to 2013. These results show that the individual characteristic differentials (e.g. human capital) in the same industry sector is the main factor causing the wage gap in both 2002 and 2013, and the problem of discrimination against migrants in the same industry sector became more serious from 2002 to 2013.

This paper studies performance differences between immigrants working in the regular Canadian labor market and those in the ethnic enclave sector of the economy. First, by studying the effects of education and race on the weekly wage earnings, I find that the returns to education are greater and being a visible minority carries less of a wage penalty for immigrants working in the regular sector compared with those in the enclave sector. Moreover, taking the AME(Average Marginal Effect) studies, I document different effects of education and race on both earnings and job segment for these two types of immigrants and propose an explanation. After this, I compute task supply and wage gaps between different types of immigrants in three census years to show differences in assimilation by immigration cohort. Finally, I use regression models to study immigrants’ task supply and weekly wages so that we can have a fuller view of the differences in performance between immigrants working in the regular and enclave sectors. I also use these models to analyze differences between immigrants and natives in Canada.

While the average labor market advantage of college graduates with STEM (Science, Technology, Engineering, and Mathematics) degrees relative to non-STEM students is well established, how this STEM versus non-STEM income gap varies across institutional contexts has been understudied. From the perspective of new institutionalism, we investigate the moderating effects of hierarchically situated higher education institutions and labor market sectors on the economic disparity between STEM and non-STEM majors by pooling data from two nationwide representative surveys collected in contemporary urban China. The results of median regression models suggest that (1) On average, STEM majors are more lucrative than non-STEM majors in Reform-Era China, a pattern resembling that of many other societies. (2) The vertical stratification of higher education institutions, i.e., the postsecondary education sector's segmentation into “junior” and “regular” colleges, is relevant, where a smaller STEM advantage over non-STEM fields is detected among junior college graduates after accounting for potential cohort variation. Moreover, this moderating effect of college tiers declines across birth cohorts. (3) Working in the state sector, such as the Communist Party and government department and institutions, relative to the other sectors, significantly narrows the earnings gap between STEM and non-STEM graduates. However, this labor-market-sector heterogeneity in the STEM versus non-STEM income gap also declines across birth cohorts. Theoretical implications of empirical findings are discussed.

One of the most important factors that determine individuals' quality of life and wellbeing is their position in the labor market and the type of jobs that they hold. When workers are rationed out of the formal segment of the labor market against their will, i.e., the labor market is segmented, their quality of life is limited, and their wellbeing is reduced. When they can freely choose between a formal or informal employment relationship, i.e., the labor market is integrated, their wellbeing can reach high levels even in the presence of informal employment. We, therefore, test whether the Ukrainian labor market is segmented along the formal-informal divide, slicing the data by gender and age. The analysis that we perform consist in the analysis of short-term and medium-term transitions between five employment states, unemployment and inactivity. We also analyze wage gaps of mean hourly earnings and across the entire hourly earnings distribution, controlling for time-invariant unobserved heterogeneity. According to our results segmentation is present for dependent employees: for a large part of informal employees informal employment is used as a waiting stage to enter formal salaried employment and is not voluntarily chosen. As far as self-employment is concerned the evidence is mixed regarding segmentation in the Ukrainian labor market. This heterogeneity in outcomes implies that not all informal work is associated with a low quality of life and reduced wellbeing in post-transition economies.

Labor market segmentation theory and new career theory differ in their appraisal of the long-term consequences of career mobility. In this article we examine career outcomes of different career types and review their correspondence to both theories. The analysis is carried out in two steps. First, we construct a career typology using Optimal Matching Analysis, utilizing data covering entire individual careers. Second, we compare these career types on a set of measures pertaining to objective and subjective career success. The results indicate that neither of the two theories is fully able to explain the data. Instead, they can be combined to provide a more adequate model of career mobility outcomes in the context of flexibilizing labor markets.

Summary This paper contributes to the continuing debates on the mechanisms driving labor market informality in developing countries by proposing an innovative way to discriminate between segmented and competitive markets. An empirical analysis is applied to Egyptian paid employment in the highly dynamic context of 1998–2006. The study is based on recent nonparametric methods applied to estimate the model with essential heterogeneity. The model is extended to decomposing the treatment effects into unobserved and observed components. The results show triple heterogeneity of workers on the Egyptian labor market, offering support to both segmented and competitive views on informal labor.

Wage formation in the labor market is analyzed with different perspectives and methods by Orthodox and Heterodox economists. Especially one of the main theories of how wages determined on the firm and industry is the theory of Segmented Labour Markets (SLM) based on the Institutional Economics and New Institutional Economics. Labor market segmentation theory suggests that jobs and labor are divided into labor market segments. While jobs are divided into “good jobs” and “bad jobs”, labor market is stratified according to job and wage. In this study, by drawing on micro-data from Turkish Statistical Institute (TurkStat) Househould Labour Force Survey (HLS), we aim to analyze the theory of SLM in Turkey on the basis of firm size for the year of 2011. In this context, Binary Logistic Regression Analysis was used. According to the analyses results, findings indicate that according to the firm size Turkish labour market shows a stratified structure in terms of gender, age, education, marital status, main activity of workplace (sector), status of workplace and occupations (International Standard Classification of Occupations-ISCO-88).

In this article we study the resilience of the Portuguese labor market, in terms of job flows, employment and wage developments, in the context of the current recession. We single out the huge contribution of job destruction, especially due to the closing of existing firms, to the dramatic decline of total employment and increase of the unemployment rate. We also document the very large increase in the incidence of minimum wage earners and nominal wage freezes. We explore three different channels that may have amplified the employment response to the great recession: the credit channel, the wage rigidity channel, and the labor market segmentation channel. We uncover what we believe is convincing evidence that the severity of credit constraints played a significant role in the current job destruction process. Wage rigidity is seen to be associated with lower net job creation and higher failure rates of firms. Finally, labor market segmentation seems to have favored a stronger job destruction that was facilitated by an increasing number of temporary workers.

I propose a language theory of labor market segmentation. People of different language origins form separate urban labor submarkets and can switch between submarkets. Two types of wage differentials emerge, namely the Within-Labor-Market Wage Gap and the Within-Language-Group Wage Gap. The average wage in each market and a worker’s choice of the labor market depend on the population sizes of the relevant groups. These implications are tested using the 2001 Census of Canada Public Use Microdata. A unique feature of these data is the reported work language, which helps me to identify labor market segments. The empirical evidence supports my theory.

Women represent the majority of informal sector workers in developing countries, especially in Sub-Saharan Africa where adolescent pregnancy rates are high. Little empirical evidence exists concerning the relationship between teen fertility and the likelihood that a woman will be employed in the informal sector. Using a panel survey in Madagascar designed to capture the transition from adolescence to adulthood, we estimate a multinomial logit model to capture the effect of the timing of first birth on female selection into four categories: non-participation, informal, formal, and student. To address the endogeneity of fertility and labor market outcomes, we instrument the timing of first birth using young women's community-level access, and duration of exposure to family planning. Our results suggest that motherhood increases the probability of employment for young women and that women whose first birth occurs during adolescence largely select into low-quality informal jobs. This effect is partially, but not entirely, mediated by the effect of teen pregnancy on schooling.

There is an ongoing debate among researchers and policy makers, whether informal sector employment is a result of competitive market forces or labor market segmentation. More recently it has been argued that none of the two theories sufficiently explains informal employment, but that the informal sector shows a heterogenous structure. For some workers the informal sector is an attractive employment opportunity, whereas for others – rationed out of the formal sector – the informal sector is a strategy of last resort. To test the empirical relevance of this hypothesis we formulate an econometric model which allows for several unobserved segments within the informal sector and apply it to the urban labor market in Cote d'Ivoire.

In this paper we use agency theory to present a process of the dichotomization of the Israeli workforce into two structures, each representing distinct organizational cultures. The first structure is the private sector, led by the high-tech industry; a model where the principal has strong control over the activities of the agent. The second is the public sector, an opposing model in which the principal has virtually no control over the activities of the agents and as a result, the effectiveness within this sector deteriorates. We argue that such conflicting systems cannot exist side by side without affecting each other and we suggest a role for human resource management (HRM) in future developments. Within the public sector it is the responsibility of the principal, the Israeli government, to gain more control over the agent and employ professional HRM systems for this purpose.

For the period of the 1960s to the late 1980s, this paper examines variation in job opportunities for men and women in the occupationally segmented and highly gender-segregated Swiss labor market. Job opportunities are defined as the volume of job openings potentially accessible to individuals with given skills and other desired characteristics. They are conceptualized within the queuing approach, taking into account the structure and cyclical fluctuations of the Swiss labor market. Theoretical arguments about employers’ criteria for ranking workers are abundant. However, the testing of the corresponding hypotheses has often been hampered due to the difficulty of measuring individual job opportunities empirically. This paper attempts to advance this research field by proposing an individual-level and time-dependent measurement of job opportunities based on annual occupation-level job-advertisement data. It yields an indicator of the volume of job opportunities accessible to workers with given occupation-specific credentials and other job-relevant characteristics (i.e., gender, age, work experience). Based on separate regression analyses for men and women, job opportunities for salient groups of labor-market participants and their ranking within the labor queues are assessed. The findings, which differ markedly by gender, show that macro-level processes, such as the economic cycle, play an important role for men's job opportunities in particular. Furthermore, job opportunities strongly depend on occupational credentials whereas educational attainment plays a minor part. Age and cohort effects are found mainly for women. These findings imply that in occupationally segmented and sex-segregated labor markets occupational credentials and sex serve as employers’ primary ranking criteria.

Dual labor market theory asserts that the American labor market is sharply divided between good jobs and bad jobs, and that mobility between these two segments of the market is severely restricted. The new labor market segmentation thesis argues that, as the practice of allocating workers to inferior jobs on the basis of race and sex has declined, employers have turned to nonstandard work arrangements and immigrants to supply labor for low-wage jobs. This paper presents a new method for measuring labor market dualism and identifying discrete labor market segments. This method allows us to examine the distribution of workers across these segments over the life course and to estimate the effects of nonstandard work and citizenship status on creating and placing workers into bad jobs. Three major findings are evident from this research. First, since the early 1970s the level dualism in the American labor market has increased substantially. Second, most workers who begin their careers in the secondary (bad) jobs eventually leave this labor market for better jobs, After young adulthood, most of the workforce is roughly divided between primary (good) intermediary (mediocre) jobs. Finally, results from the multivariate analysis support the new segmentation hypothesis. Combined, nonstandard work and citizenship now play a greater direct role in allocating workers to secondary and intermediary jobs than race or sex.

This paper studies the labor market effects of fiscal adjustment in a two-sector, three-good intertemporal framework. Key features of the model are an informal sector, minimum wages, unionized labor in the formal economy, imperfect labor mobility, and public production of intermediate inputs. bLuxuryQ and wait unemployment prevail in equilibrium. It is shown that if unions care sufficiently about employment, and if the degree of openness is high, an increase in the price of government services may reduce unemployment in the steady state. A similar result would hold in an efficiency-wage setting if the bdisciplinary effectQ of unemployment is sufficiently strong. D 2004 Published by Elsevier B.V.

Two representative surveys, relating to 1995 and 1999, are used to analyse the effect of enterprise profitability on wages in urban China. The labor market is still at a rudimentary stage and job mobility remains low, so that wage differences across firms are not necessarily ironed out by labor market competition. There is evidence that, standardising for worker characteristics, profitability raised wages substantially; and that this effect became stronger over time. Moreover, whereas in 1995 the effect of profitability on the wage was closely related to tenure within the firm, in 1999, it occurred across the board. The relationship between profits and wages contributed to a widening of wage inequalities over time. Causation both ways, i.e., both profit-sharing and efficiency wage payments, cannot be ruled out (the two are plausibly intertwined in China) but evidence is adduced in favour of at least some profit-sharing.

Unemployment in South Africa is so widespread that it demands an explanation. This paper examines two questions about South African unemployment. Firstly, why do the unemployed not enter the informal sector, as is common in other developing countries? Secondly, why do the unemployed not enter wage employment more readily? The findings provide little support for the idea that unemployed people choose to be unemployed: the unemployed are substantially worse off, and less satisfied with their quality of life, than they would be if informally employed. Various impediments to entry into the informal sector increase open unemployment. The test of the hypothesis that the unemployed have unrealistically high wage aspirations suggests that the commonly reported high reservation wages (relative to predicted wages) are not to be interpreted as reflecting unwillingness to work.

This paper assesses earnings differences among individuals of Brazilian farm social classes rooted in education and years of labor force experience. Very large subsamples of farm personnel in the National Household Sample Surveys of 1973, 1982, and 1988 provided the data. OLS regression showed large effects of each additional year of education and of labor force experience for the subsample as a whole. Five farm social classes were identified using a combination of class analysis and labor market segmentation criteria. They are Large Farmers (LF), Farm Managers (FM), Family Farmers (FF), Legally Protected (skilled) Farm Laborers (PFL), and Unprotected (unskilled) Farm Laborers (UFL). With or without taking into account the interactions of education and of years of job experience, the estimated earnings gains (EEG) (over those of the UFL class) to LF were found to be very large and increasing over the 15-year period. The EEGs of the FM class were also quite large and increasing over the period. Those of the FF fell. The EEG of the PFL class was moderately high; and it too rose. The class composition also changed. The estimated size of the LF class fell from 6 to 3%. That of the FM class remained small at about 1%. The PFL gained from 3 to 7%, while that of the other two classes remained trendless – FF 32−30−32% and UFL 58−57−60%. It would appear the Brazilian farm social class structures moved toward a form of a Weberian ideal type of the capitalist system as large properties and their owners became more concentrated and the participation of more skilled laborers increased; and as the returns to education and experience increased, especially for large farmers, farm managers, and legally protected farm (skilled) laborers.

This paper studies the effects of a stabilization program based on a reduction in the devaluation rate in an optimizing model with capital controls, minimum wages for unskilled labor, an informal sector, and public production of intermediate inputs. Perfect mobility across sectors of the unskilled labor force prevents the emergence of unemployment for that category of labor, but skilled unemployment prevails in equilibrium. The analysis highlights the role of endogenous labor market segmentation in assessing the wage and employment effects of stabilization policies. q 2001 Elsevier Science B.V. All rights reserved.

According to the conventional wisdom, foreign direct investment (FDI) can raise relative wages of skilled labor in a host country by bringing in skill-biased technology. This paper proposes an alternative hypothesis that in an economy characterized by labor market segmentation and high labor mobility costs, FDI could increase relative wages of skilled labor even without bringing in skill-biased technology. Chinese urban household survey data are used to test the hypothesis. We first estimate relative wages in Chinese state-owned enterprises (SOEs) and foreign-invested enterprises (FIEs) by correcting for possible sample selectivity caused by employment choice between SOEs and FIEs. Employment choice is then examined to provide evidence of the costs of labor mobility. The research implies that skill premium in a host country with labor market distortions may increase faster than when skill-biased technology is the only force for skill upgrading.

This paper tests the competitiveness of the labor market in a semi-industrialized county located in eastern China. Labor market segmentation is linked to the degree of government interventions and the management structures of the local enterprises, and two forms of rationing labeled entrance and time rationing are identified. A test based on income maximizing behavior is developed to find the form of rationing that is consistent with the data. The results show that the labor market is not competitive and time rationing prevails in the county. In addition, industrial wages are not responsive to experience and education, but strongly biased against women and varying to government interventions.

Even though informal employment is widespread in transition economies, the literature on this phenomenon in the region is rather scarce. For policy makers it is important to know the incidence and the determinants of informal employment. In the first part of the paper we demonstrate that its incidence and to a lesser degree its determinants depend on the definition used. We then discuss studies that attempt to test for labor market segmentation in transition economies along the formal-informal divide. The presented results are inconclusive, and we come to the conclusion that more work needs to be done before we can make definitive statements about whether labor markets are integrated or segmented in transition economies. Last but not least we introduce a new research area that links risk preferences and selection into labor market states. We show that if individuals have a choice, relatively risk-loving workers have an increased likelihood to choose informal employment and self-employment.

The labor market in developing countries is remarkably heterogeneous with a small productive formal sector, enjoying high wages and attractive employment conditions and another large informal sector with low productivity and volatile wages. The informal sector is particularly diverse. In this paper we examine the heterogeneity of the informal sector at regional level in Colombia. In general, our findings suggest that, both voluntary and involuntary informal employment co-exist by choice and as a result of labor market segmentation. We also find that there are striking differences in labor market characteristics between cities, in particular in the traditional informal segment.

We formalize and examine two overlapping models that show how rising inequality combined with ethnic and racial heterogeneity can explain why many advanced industrial countries have experienced a drop in support for redistribution as inequality has risen. One model, based on altruism and homophily, focuses on the effect of increasing “social distance” between the poor and the middle class, especially when minorities are increasingly overrepresented among the very poor. The other, based on self-interest, combines an “insurance” model of preferences for redistribution with increasingly segmented labor markets, in which immigration of workers without recognized skills leaves most native workers better off but intensifies competition for low-end jobs. Empirically, when we estimate parameters from the two models using data from multiple waves of ISSP surveys, we find that labor market segmentation, previously omitted in this literature, has more consistent effects than social distance.

Analyzing the self-selection of workers into formal and informal sector employment in Tajikistan, a poor transition economy, with higher informal sector than formal sector wages and an informal sector employment share exceeding 50 percent, we find that the selection of formal and informal sector workers is based on comparative advantages rather that labor market segmentation. Furthermore, labor supply to the two sectors reacts rather elastically to relative wages. Policies increasing relative wages in the formal sector could thus be effective in reducing the high informal sector employment share in this country.

Despite the importance placed on reducing public sector employment in sub-Saharan Africa, remarkably little is known about the labor market transition paths of departing public sector workers. This paper uses household survey data from Conakry, Guinea to establish evidence of labor market segmentation between the wage and nonwage sectors. An empirical model of the unemployment durations experienced by departing public sector workers finds that transition paths vary significantly according to personal characteristics that also affect the resulting earnings opportunities in segmented labor markets. Particularly, there is a marked tendency of females to enter quickly the nonwage sector, relative to males, and a negative influence of severance payments on wage sector employment acceptance. J. Comp. Econom., December 1997, 25 (3), pp. 385–402. Department of Agricultural and Applied Economics, Virginia Tech University, 208 Hutcheson Hall, Blacksburg, Virginia 24060-0401 and Cornell University, 3M28 Martha Van Rensselaer Hall, Ithaca, New York 14853.

This paper examines the effect of skilled-biased technological shocks on the structure of wages and the composition of employment in a two-sector economy with a heterogeneous work force. Efficiency wage considerations, turnover costs and minimum wage legislation lead to labor market segmentation and equilibrium unemployment. The analysis focuses on the effects of a technological shock that raises the demand for skilled labor and reduces the demand for unskilled labor, in such a way that the total demand for labor in the primary (high wage) sector remains constant at initial wages. The presence of efficiency considerations implies that such a shock tends to reduce total employment in that sector, as the equilibrium increase in skilled labor employment is smaller than the drop in the employment of unskilled labor. Efficiency factors and initial unemployment are shown to magnify the adverse employment effects of pro-skilled technological progress.

Using material available in the Canadian censuses, we construct some of the most detailed historical estimates for the industrialized world for occupational structure and the gender pay gap from 1900 to 1930. Our findings suggest that pay inequality in Canada diminished over the period under study, although the rate of pay received by women remained substantially below that of men. This decline is found to be due, to a large extent, to the changing occupational structure between women and men over time which involved both the gradual dominance of women in clerical work and the absence of any change in labor market segmentation. We also find that, for each year examined in this study, the differential distribution of women and men between sectors did not play a large role in accounting for the pay gap.

This paper takes stock of informal employment in Russia analyzing its incidence and determinants. Using the regular waves and an informality supplement of the Russian Longitudinal Monitoring Survey (RLMS) it develops several measures of informal employment and demonstrates that the incidence varies widely across the different definitions. We also show that the determinants of informal employment are roughly stable across the different measures: workers who are males, relatively young, unskilled and employed in construction and trade and related services have a higher likelihood to have an informal job. We also take a look at the issue of labor market segmentation along the informal-formal divide by estimating an informal-formal wage gap at the means and across the entire wage distributions. We find only weak evidence for labor market segmentation in Russia when estimating an informal-formal wage gap for salaried workers at the mean. The results of quantile regressions show a wage penalty in the lower half of the distribution and no gap in the upper half for informal employees. In contrast, informal self-employed and entrepreneurs have conditional mean wages that are higher than the mean wages for the formally employed. Across the entire wage distribution, however, we find a negative wage gap in the lowest quartile and a strongly positive wage gap in the highest quartile, pointing to a segmented informal sector with a lower free entry tier and an upper rationed tier.

Labor market dualism – the segmentation of workers between formal, legally protected employment and informal, unprotected status – has long drawn attention from scholars and policy makers in Latin America. This article argues that lasting patterns of economic and political segmentation of workers arose earlier in the region’s history than has previously been understood, well before the classic “incorporation” period. Late nineteenth century practices for the recruitment and retention of workers shaped Latin America’s first sets of labor laws, most notably those governing union-organization and individual-level worker job stability. Subsequently, these first laws served as important templates for subsequent development, constraining and conditioning the labor codes adopted under mass-based politics. Using historical data drawn from Chile, Peru, and Argentina; the article shows how differing recruitment practices, and variation in the extension of effective suffrage rights and electoral participation; shaped early legal labor market segmentation and inequality in Latin America.

This working paper examines employment quality and labour market segmentation in Argentina. The labour market in the country is marked by heterogeneity; the rate of informal employment is high, though it diminished significantly during the 2003-2011 period.

We use a mixture regression model to identify segmentation in the Israeli labor market, and propose a new method for assigning workers to simulated segments. We identified a low-wage segment and a high-wage segment, as well as a third segment with a large wage variability that we interpret as "noisy" observations. We found quantitatively small but qualitatively reasonable differences in workers’ characteristics between the low-wage and high-wage segments, while the coefficient differences were much larger than the differences in worker characteristics, indicating that much of the wage disparity in Israel is due to unobserved factors rather than to observable characteristics. Some policy-relevant insights are derived.

In this paper, we explore the connection between labor market segmentation in two sectors, a modern protected formal sector and a traditional- unprotected-informal sector, and overeducation in a developing country. Informality is thought to have negative consequences, primarily through poorer working conditions, lack of social security, as well as low levels of productivity throughout the economy. This paper considers an aspect that has not been previously addressed, namely the fact that informality might also affect the way workers match their actual education with that required performing their job. We use micro-data from Colombia to test the relationship between overeducation and informality. Empirical results suggest that, once the endogeneity of employment choice has been accounted for, formal male workers are less likely to be overeducated. Interestingly, the propensity of being overeducated among women does not seem to be closely related to the employment choice.

We provide new evidence on the debate whether CEOs in public U.S. firms are significantly overpaid using their counterparts in private U.S. firms over the period 1999 to 2008. Using public and private firm CEO pay data made available through mandated SEC disclosures, we first show that after controlling for firm and CEO characteristics, public firm CEOs are paid more than private firm CEOs, with a modest pay premium of about 20%, and public firm CEOs are given more on-going equity incentives. This public pay premium becomes economically insignificant after accounting for differences in risk, dividend policy, and CEO turnover between public and private firms. We then show that both public and private firm CEO annual compensation is positively and significantly related to firm accounting performance, and the pay-performance link is much stronger in public firms. We provide some evidence that the pay differential is related to labor market segmentation between the two types of firms and increasing over time. Finally, when firms transition from private to public status, we find that both the level and structure of pay change significantly in ways that corroborate our findings from the cross-section.

Labor market segmentation and migration are two phenomena that are dramatically reshaping the spatial, economic, and social relationships of many urban cities in both developed and developing countries. To this point, the bulk of Chinese literature falls within the context of area studies, without much effort to link Chinese migration and emerging labor market outcomes to larger global trends and discourse. This research attempts to link the body of internal Chinese migration and emerging labor markets to labor market segmentation theory, primarily developed by urban economists and sociologists. My findings provide evidence that applying labor market segmentation theory to examine emerging markets in China offers fruitful results that help to identify the new urban stratification that exists in China.

This paper shows that the differential in earnings between large and small companies is a much more prominent feature of the Japanese than of the American labor market. Up to one-third of the differential is explained by differing levels of education and experience in the United States, while in Japan, only some 10% of the differential is explained by these factors. The Japanese and U.S. differentials also differ with respect to their behavior in response to local labor market conditions. Japanese small firms show an unemployment elasticity of the regional wage of − 8%, slightly less than that shown by all U.S. firms. Japanese large firms show an inelastic response to local labor market conditions. The recent increase in the firm-size differential in Japan between 1974 and 1987 is a phenomenon that can be understood primarily in relation to the increase in the unemployment rate over this period. The stability of the U.S. firm-size differential is due to the absence of labor market segmentation between large and small firms, as well as to relatively small changes in differences in schooling and experience by firm size. J. Japan Int. Econ., June 1993, 7 (2), pp. 132–156. New York State School of Industrial and Labor Relations, Cornell University, Ithaca, New York 14853-3901.

I build a simple model of labor market segmentation in this paper. People of different language origins form separate urban labor submarkets. Utilizing the reported work language in the 2001 Census of Canada Public Use Microdata File on Individuals, I identify workers' labor market segments and test the two key implications of the model. First, I find that English speaking workers earn more than workers whose first language is not English even though they all speak English at work. In addition, minority workers earn higher wages in English-speaking jobs than non English-speaking jobs. Second, wages in the majority labor market increase with the majority population. On the other hand, wages in the minority labor market decrease with the majority population, but they increase with the minority population.

This article discusses regional labor segmentation using stochastic Markov chains. We present a formal model and derive preliminary results using the evolution of wages in Colombian urban areas. The results show that there was regional labor market segmentation in wages for university graduates during the period from 1993 to 2000, and corroborate the existence of structural changes in wages during the nineteen nineties.

In the 1890s, nominal farm wages in Michigan were only about 50% of unskilled city wages. Before we can conclude that such gaps were manifestations of labor market segmentation, they must be adjusted by the fact that in the cities living costs were higher, unemployment may have been higher, city workers may have been older, and farm laborers received perquisites. Using some Michigan Bureau of Labor surveys, we show that the 50% nominal wage gap collapses to a real earnings gap of 9 to 13%. On the basis of this evidence, much of the gaps between farm and city are an illusion.

The paper uses data from the 1980 Brazilian census to analyse the sources of earnings variation among males with emphasis on the role of education, labor market segmentation, geographic location and sector of economic activity. The results indicate a sizeable private rate of return to investment in education across labor market “segments”, especially among rural workers and the self-employed. Such a finding is upheld after econometric corrections for dependent variable (earnings) truncation and selectivity bias regarding who enters a particular economic sector. However, regional earnings differentials persist even after adjustment for a set of personal and job characteristics. Thus, internal migration still has a role to play towards reducing regional earnings disparities.

The workhorse of urban labor theory in development economics is the formal/informal model of labor market segmentation and its variants. The seminal Harris-Todaro model has been extended over the years to cope with various empirical puzzles not explained in the original framework. However, one issue stands out that cannot easily be explained in a competitive framework. Specifically, there is considerable evidence suggesting that many workers choose to work in the informal sector, even though formal sector jobs are available to them and despite the fact that wages are typically higher in the formal sector. One solution is to depart from the usual competitive framework and consider formal and informal labor markets under oligopsony/monopsonistic competition.

This paper links employment dynamics to the business cycle in order to examine the voluntary nature of self-employment in Argentina. Our results suggest that the transition to self-employment is more common during recessions and that the likelihood of becoming self-employed increases with the length of the recession and the unemployment duration. We find that the majority of self-employed workers do not have employees and earn significantly less than salaried workers. Individuals in this sector are often young and less educated and have trouble obtaining a salaried position regardless of the macroeconomic conditions. Middle-aged, college-educated individuals also tend to enter self-employment as a temporary refuge when they encounter difficulties during a recession. Our results suggest, however, that for entrepreneurs who have employees, entry into self-employment is procyclical and voluntary and has characteristics similar to those predicted for highly skilled risk-taking entrepreneurs. Including idiosyncratic entrepreneurial abilities in a standard job search model allows us to predict such labor market segmentation and the cyclical pattern of entrance into self-employment.

This paper assesses labor market segmentation across formal and informal salaried jobs and self-employment in three Latin American and three transition countries. It looks separately at the markets for skilled and unskilled labor, inquiring if segmentation is an exclusive feature of the latter. Longitudinal data are used to assess wage differentials and mobility patterns across jobs. To study mobility, the paper compares observed transitions with a new benchmark measure of mobility under the assumption of no segmentation. It finds evidence of a formal wage premium relative to informal salaried jobs in the three Latin American countries, but not in transition economies. It also finds evidence of extensive mobility across these two types of jobs in all countries, particularly from informal salaried to formal jobs. These patterns are suggestive of a preference for formal over informal salaried jobs in all countries. In contrast, there is little mobility between self-employment and formal salaried jobs, suggesting the existence of barriers to this type of mobility or a strong assortative matching according to workers' individual preferences. Lastly, for both wage differentials and mobility, there is no statistical difference across skill levels, indicating that the markets for skilled and unskilled labor are similarly affected by segmentation.

In the context of continuing influxes of large numbers of immigrants to the United States, urban labor market segmentation along the lines of race/ethnicity, gender, and class has drawn considerable growing attention. Using a confidential dataset extracted from the United States Decennial Long Form Data 2000 and a multilevel regression modeling strategy, this paper presents a case study of Chinese immigrants in the San Francisco metropolitan area. Correspondent with the highly segregated nature of the labor market as between Chinese immigrant men and women, different socioeconomic characteristics at the census tract level are significantly related to their occupational segregation. This suggests the social process of labor market segmentation is contingent on the immigrant geography of residence and workplace. With different direction and magnitude of the spatial contingency between men and women in the labor market, residency in Chinese immigrant concentrated areas is perpetuating the gender occupational segregation by skill level. Whereas abundant ethnic resources may exist in ethnic neighborhoods and enclaves for certain types of employment opportunities, these resources do not necessarily help Chinese immigrant workers, especially women, to move upward along the labor market hierarchy.

This paper explores the ability of a class of one-sector, multi-input models to generate indeterminate equilibrium paths, and endogenous cycles, without relying on factors' hoarding. The model presents a novel theoretical economic mechanism that supports sunspot-driven expansions without requiring upward sloping labor demand schedules. Its distinctive characteristic is that the skill composition of aggregate labor demand drives expansionary i.i.d. demand shocks. Next, the model explains the labor market dynamics from the supply side, while endogenizing the capital productivity response to changes in the aggregate labor demand composition. Last but not least, it is worth to mention that the model presents an effective shock propagation mechanism that operates into the labor market and across labor market segments through the cross elasticities of equilibrium labor demand and supplies. In this respect the model can be seen as quite general formulation (with or without aggregate increasing returns to scale) for analyzing labor market dynamics within a general equilibrium model with labor market segmentation.

The massive downsizing of the state-owned sector and the concomitant impressive growth of the private sector at the end of the 1990s have altered the nature of the Chinese labor market. By bringing in more competition and market mechanisms, they have contributed to increasing labor turnover and competitiveness in market wages. Using two urban household surveys for 1995 and 2002, this paper analyzes the evolution of labor market segmentation in urban China, by applying an extended version of Oaxaca-Blinder decomposition methods. During the 7-year period, the sharp increase in earnings for all workers however shows substantial differences across ownership, economic sectors, and regions. We find strong evidence of a multitiered labor market along these three major lines and highlight increasing segmentation within each of the three dimensions, the gap between the privileged segments of the labor market and the most competitive segments widening over time.

The economic literature relative to Brazilian labor market informality is very disperse and presents a significant lack of organization. In that sense, the purpose of this paper is to organize and discuss on a systematic way the main pieces of literature concerning informality in the Brazilian labor market using, whenever it is possible, the international literature as a comparison point for the existing results relative to Brazil's experience. More specifically, questions related to wage differentials between formal and informal workers, labor market segmentation and the effect of institutions on the informal sector are emphasized.

This study considers those wage earners who are covered by a social security program as part of the formal sector and those wage earners who are not covered by any social security program as part of the informal sector. Using 1994 Household Expenditure Survey, I first examine how individuals are selected into nonparticipation and employment in the covered, uncovered and other sectors. Then I estimate the selectivity corrected wage equations to examine wage determination in these sectors. These analysis are carried out for men and women separately. The results indicate that wage earners with more education are more likely to have social security coverage while those with less education are more likely to be uncovered. Further, when controlled for the observed characteristics and sample selection, for men, covered sector wages are at least twice as higher than uncovered sector wages at all levels of experience and education. This is true with some caveat for women also. This large differential in wages can be taken as an indication of labor market segmentation between the covered and uncovered wage earners.