Econometrica: Jan 1991, Volume 59, Issue 1

Segmented or Competitive Labor Markets

https://doi.org/0012-9682(199101)59:1<165:SOCLM>2.0.CO;2-I
p. 165-187

Th. Magnac

We develop an integrated microeconomic model derived from a labor supply model in a four-sector labor market with explicit demand constraints. This method allows us to test several assumptions on labor market equilibria: strongly or weakly competitive or segmented. We show that more important a feature of labor markets than segmentation is the presence of comparative advantages for individuals between the various economic sectors. The model is applied to data on women's labor force participation in the main towns of Colombia in 1980. It uses multivariate Probit and Tobit techniques.
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