Employer Size and Dual Labor Markets

25 Pages Posted: 22 Aug 2007

See all articles by James B. Rebitzer

James B. Rebitzer

Boston University School of Management; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; Bard College - The Levy Economics Institute

Michael D. Robinson

Mount Holyoke College - Department of Economics

Date Written: January 1991

Abstract

Recently developed effort regulation models argue that labor markets are segmented because of differences in the technology of supervision across firms. primary jobs pay above market clearing wages because these jobs are difficult to monitor. Secondary jobs, in contrast, pose no monitoring difficulties and therefore pay a market clearing wage. If, as the literature suggests, increases in employer size make supervision more difficult, we should observe that wages increase with employer size in primary jobs but not in secondary jobs. We test this hypothesis using a switching regression model. We find evidence of an employer size wage effect in both primary and secondary labor markets. However, consistent with the prediction of effort control models, the size effect on wages is considerably larger in primary than secondary jobs.

Suggested Citation

Rebitzer, James B. and Robinson, Michael D., Employer Size and Dual Labor Markets (January 1991). NBER Working Paper No. w3587. Available at SSRN: https://ssrn.com/abstract=471545

James B. Rebitzer (Contact Author)

Boston University School of Management ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
617 353 4605 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Bard College - The Levy Economics Institute

Blithewood
Annandale-on-Hudson, NY 12504
United States

Michael D. Robinson

Mount Holyoke College - Department of Economics ( email )

South Hadley, MA 01075
United States
(413) 538-2215 (Phone)

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