A Goodness of Fit Test of Dual Labor Market Theory

11 Pages Posted: 28 Dec 2006

See all articles by William T. Dickens

William T. Dickens

Northeastern University - Department of Economics; Federal Reserve Banks - Federal Reserve Bank of Boston; Brookings Institution

Kevin Lang

Boston University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 1987

Abstract

We subject our dual labor market model to a goodness of test fit and compare the results with those obtained using a single equation model with a complex error structure. The dual labor market does an excellent job of predicting the wage distribution except for failing to explain bunching at $7.50 and $10.00 per hour. The null hypothesis that the model is correct cannot be rejected at the .05 level. In contrast, the wage distribution predicted by the single labor market model differs significantly from the observed distribution.

Suggested Citation

Dickens, William T. and Lang, Kevin, A Goodness of Fit Test of Dual Labor Market Theory (August 1987). NBER Working Paper No. w2350, Available at SSRN: https://ssrn.com/abstract=349175

William T. Dickens (Contact Author)

Northeastern University - Department of Economics ( email )

301 Lake Hall
Boston, MA 02115
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Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
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Brookings Institution ( email )

1775 Massachusetts Ave. NW
Economic Studies
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Kevin Lang

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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