Reassessing Segmentation in the Labour Market: An Application for Italy 1995–2004

18 Pages Posted: 8 May 2013

See all articles by Michele Battisti

Michele Battisti

University of Palermo; Luiss Guido Carli University

Date Written: May 2013

Abstract

The aim of this paper is to test for the presence of dualism in a standard wage regression. The disparity in wages between primary and secondary workers, according to labour market segmentation theory, is not provided by worker characteristics, but rather by job characteristics. A standard way to assess this situation is by looking at the estimated coefficients in a standard regression for comparable workers across different labour market segments. In an attempt to avoid arbitrary modelling choices, we deploy mixture regression methods which allow for endogenous determination of the number of existing labour market segments. Using Italian data, our modelling strategy outlines stark differences in returns to human capital between homogeneous workers in different markets. Thus, future policies should consider these findings when implementing labour market measures.

Keywords: dual labour markets, human capital, mixture regressions

JEL Classification: J24, J32, J42, C29

Suggested Citation

Battisti, Michele, Reassessing Segmentation in the Labour Market: An Application for Italy 1995–2004 (May 2013). Bulletin of Economic Research, Vol. 65, pp. s38-s55, 2013, Available at SSRN: https://ssrn.com/abstract=2262150 or http://dx.doi.org/10.1111/j.1467-8586.2011.00415.x

Michele Battisti (Contact Author)

University of Palermo ( email )

Viale delle Scienza
Palermo, 90128
Italy

Luiss Guido Carli University ( email )

Via O. Tommasini 1
Rome, Roma 00100
Italy

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