Labor Market Segmentation - Labor Market Segmentation Debates and Propositions

Labor Market Segmentation Debates and Propositions

• Labor incomes are the most important component of total incomes.
  • An alternative position: Total incomes vary largely because of variation in capital incomes and other non-labor income sources.

• Employment is important primarily as a means of raising incomes and thereby reducing poverty.
  • An alternative position: The goal of policy is employment maximization or unemployment minimization.

• There are multiple labor markets.
  • An alternative position: There is one single labor market.

• Workers differ in terms of skills.
  • An alternative position: Labor is homogeneous.

• For workers of any given skill type, there are better jobs and worse jobs.
  • An alternative position: The law of one price holds in the labor market.

• The various labor markets are linked to one another.
  • An alternative position: Changing conditions in one labor market have no effect on other labor markets.

• Workers maximize utility. In low-income countries, utility can usefully be thought of as a function of income alone, although sometimes utility is a function of working conditions as well as income.
  • An alternative position: No single unified purpose guides workers’ behavior.

• Firms maximize profits and make labor market decisions accordingly.
  • An alternative position: Firms exist to serve the interests of multiple stakeholders, of whom workers are one.

• The number of good jobs is limited. Workers who take up bad jobs do so in preference to unemployment.
  • An alternative position: The number of good jobs is not limited. Each worker is doing the type of job that maximizes his/her utility.

• Open unemployment is less important a problem than is working poverty.
  • An alternative position: Unemployment is the main labor market problem

Workers who are in the similar trade are treated differently according to the sector they are placed in. The differences in the labor market segmentation imply differences in the way which they are trained, allocated, organized and paid. This has to be directly related to the way in which the labor process is organized. The two sectors organize the skills and education credentials.

All employers should be able to receive the same employment standards examples, at least minimum wages, maximum hour laws, health laws etc. regardless of what sector they belong to. The management will not have complete control, there should be employment standards for all employees that allows them to monitor occupational safety, security, health safety and other required standards such as minimum wage requirement, maximum hour laws etc.