Neoclassical and Sociological Perspectives on Segmented Labor Markets

Neoclassical theory has been misrepresented in the segmented economy literature. Consequently, most tests of "structural" vs. "neoclassical" models are inadequate. Moreover, segmented economy theorists have concentrated on the least significant departures of segmented models from neoclassical economics. In fact, neoclassical economists have developed elements of a segmented labor market model which is similar to the segmented economy theories. We sketch this model and argue that the neoclassical model gives a precise meaning to the concept of dual or segmented labor markets but does not suggest that a classification system for job characteristics must rely on a single dimension.