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Discussion Paper Details

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Title: Segmented Labor Markets and Unemployment

Author(s): Assar Lindbeck and Dennis J. Snower

Publication Date: April 1991

Keyword(s): Segmented Labour Markets and Unemployment

Programme Area(s): Applied Macroeconomics

Abstract: The paper suggests alternatives to the Harris-Todaro theory to explain unemployment in segmented labour markets. We focus on a labour market with a perfectly competitive secondary sector and an imperfectly competitive primary sector, the latter combining salient features of the efficiency-wage, insider-outsider and bargaining theories of employment and wage formation. Unemployment and labour-market segmentation are explained with reference to heterogeneous preferences, productivities and endowments among workers. The responsiveness of unemployment to external shocks is shown to depend crucially on whether the above heterogeneities are exogenously given or endogenously generated through workers' employment histories.

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Bibliographic Reference

Lindbeck, A and Snower, D. 1991. 'Segmented Labor Markets and Unemployment'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=523