Working Paper: NBER ID: w3647
Authors: James B. Rebitzer; Lowell J. Taylor
Abstract: This paper presents an incentive-based dual labor market model. Three implications of the model are emphasized. First, in equilibrium, there is an excess supply of workers to primary jobs. Second, when demand is uncertain, firms may choose a mix of primary and contingent workers to perform the same job, even when these workers are perfect substitutes in production. Third, firms prefer to hire into primary jobs workers with strong job attachment and workers whose preferences lead them to prefer long work hours. We argue that industries with high proportions of part-time workers will tend to have large concentrations of contingent workers. The empirical finding that the wages and benefits of full-time workers are significantly reduced in industries with large concentrations of part-time workers appears consistent with this hypothesis.
Keywords: labor markets; employment; wages; contingent labor
JEL Codes: J21; J23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| product demand uncertainty (D89) | hiring of contingent workers (J63) |
| strong job attachment (J29) | preference for hiring into primary jobs (M51) |
| uncertainty of demand (D89) | strategic hiring of contingent workers (M55) |
| employment structure (J21) | wage dynamics (J31) |