Segmented Labour Markets and Earnings in Ireland. ESRI Working Paper No. 75, April 1996

Hughes, Gerard and Nolan, Brian (1996) Segmented Labour Markets and Earnings in Ireland. ESRI Working Paper No. 75, April 1996. [Working Paper]

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Abstract

Human capital theory emphasizes differences among individuals as the determinants of the distribution of earnings: workers in low-wage jobs are those who have low productivity, because they have been unable or unwilling to obtain the skills necessary to improve their productivity and earnings. Dual labour market theory, on the other hand, sees the labour market as divided into distinct primary and secondary sectors, of "good" and "bad" jobs respectively, with different wage determination systems and with good jobs being rationed. More broadly, labour market segmentation theory sees the labour market as divided into distinct sectors systematically differentiating the job rewards achieved by comparable individuals. The ideas behind these segmentation theories have a long history, and inspired a substantial body of research in the 1970s, particularly in the USA (following Doeringer and Piere (1971). 1 After a brief eclipse following Cain's (1976) critique there has been a resurgence of interest in segmentation in the USA in the last decade, with the work of Dickens and Lang being particularly influential (Dickens and Lang 1985, 1993). Indeed some see dual labour market theory as having recently been integrated into the mainstream of labour market theory (Blackaby, Clark and Leslie 1995), though in our view this assessment is premature.

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