Uses theoretical models to analyse the macroeconomic implications of the dual labour market. Includes an introduction to the techniques of dynamic programming and the matching function.

Despite substantial differences in their views of the appropriate policy response to the existence of poverty, neither the proponents of dual market theory nor its critics have proposed potentially conclusive tests of the dual market hypothesis. This paper presents a test of the two central propositions of dual market theory -- 1) the existence of two distinct labor markets with different wage setting mechanisms and 2) the existence of barriers to mobility between the labor markets. We find considerable support for both hypothesis. Estimation of a switching model of wage determination with unknown regimes yields two distinct wage equations. The one which most workers are associated with closely resembles the standard human capital regression with significant returns to education and experience. The other equation is flat with no returns to human capital. These two equations resemble the predictions of dual market theory for the "primary" and "secondary" markets respectively. Further, we present evidence that(at least) some non-white workers are involuntarily confined to the secondary market. This crowding of minority workers into the low wage labor market accounts for a substantial portion of white/non-white wage differences. We interpret these results as providing empirical support for the dual market hypothesis and for recent theoretical work on efficiency wagemodels. In addition, combining the efficiency wage argument with the observation that much of the white/non-white wage difference is explained by the exclusion of non-whites from the primary sector suggests an explanation for the persistance of wage differences

This book reappraises the Japanese employment system, characterized by such practices as the periodic recruiting of new graduates, lifetime employment and seniority-based wages, which were praised as sources of high productivity and flexibility for Japanese firms during the period of high economic growth from the middle of the 1950s until the burst of bubbles in the early 1990s. The prolonged stagnation after the bubble burst induced an increasing number of people to criticize the Japanese employment system as a barrier to the structural changes needed to allow the economy to adjust to the new environment, with detractors suggesting that such a system only serves to protect the vested interests of incumbent workers and firms. By investigating what caused the long stagnation of the Japanese economy, this book examines the validity of this currently dominant view about the Japanese employment system. The rigorous theoretical and empirical analyses presented in this book provide readers with deep insights into the nature of the current Japanese labor market and its macroeconomic impacts.

This book discusses the institutional aspects of the American labor market. The introduction assesses the major changes since 1971.

The need to understand the theories and applications of economic and finance risk has been clear to everyone since the financial crisis, and this collection of original essays proffers broad, high-level explanations of risk and uncertainty. The economics of risk and uncertainty is unlike most branches of economics in spanning from the individual decision-maker to the market (and indeed, social decisions), and ranging from purely theoretical analysis through individual experimentation, empirical analysis, and applied and policy decisions. It also has close and sometimes conflicting relationships with theoretical and applied statistics, and psychology. The aim of this volume is to provide an overview of diverse aspects of this field, ranging from classical and foundational work through current developments. - Presents coherent summaries of risk and uncertainty that inform major areas in economics and finance - Divides coverage between theoretical, empirical, and experimental findings - Makes the economics of risk and uncertainty accessible to scholars in fields outside economics