A Goodness of Fit Test of Dual Labor Market Theory

We subject our dual labor market model to a goodness of test fit and compare the results with those obtained using a single equation model with a complex error structure. The dual labor market does an excellent job of predicting the wage distribution except for failing to explain bunching at $7.50 and$10.00 per hour. The null hypothesis that the model is correct cannot be rejected at the .05 level. In contrast, the wage distribution predicted by the single labor market model differs significantly from the observed distribution.

A Test of Dual Labor Market Theory

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.

Testing Dual Labor Market Theory: A Reconsideration of the Evidence

This paper replicates and extends our earlier analysis of dual market theory. We use a technique which estimates for each worker a probability of being in the primary sector on the basis of his characteristics. We use this information to determine the occupational and industrial composition of the sectors. We continue to produce results which are very supportive of the theory. In studies by other authors, workers were "assigned" to the primary or secondary sector on the basis of the industry or occupation in which they are employed and educated guesses about the industries or occupations which make up the two sectors. We find that previous studies, which produced mixed and inconclusive results, had serious misclassification problems. In the cases examined, at least half of all full time prime age male workers identified as being in the secondary sector by these classification schemes are found to have a high probability of primary sector attachment. Past studies which were most supportive of dual market theory are found to have had the least severe misclassification problems.

Strategic default on first and second lien mortgages during the financial crisis

Strategic default behavior suggests that the default process is not only a matter of inability to pay. Economic costs and benefits affect the incidence and timing of defaults. As with prior research, the authors find that people default strategically as their home value falls below the mortgage value (exercise the put option to default on their first mortgage). While some of these homeowners default on both first mortgages and second lien home equity lines, a large portion of the delinquent borrowers have kept their second lien current during the recent financial crisis. These second liens, which are current but stand behind a seriously delinquent first mortgage, are subject to a high risk of default. On the other hand, relatively few borrowers default on their second liens while remaining current on their first. This paper explores the strategic factors that may affect borrower decisions to default on first vs. second lien mortgages. The authors find that borrowers are more likely to remain current on their second lien if it is a home equity line of credit (HELOC) as compared to a closed-end home equity loan. Moreover, the size of the unused line of credit is an important factor. Interestingly, they find evidence that the various mortgage loss mitigation programs also play a role in providing incentives for homeowners to default on their first mortgages.Mortgage loans ; Default (Finance) ; Home equity loans

Labor Market Segmentation and the Union Wage Premium

Studies of the earnings of union workers have consistently shown that they earn considerably more than nonunion workers. This paper considers whether part of this observed union/nonunion differential is due to unions organizing high paying primary sector jobs. We extend our earlier work on the dual labor market in which we used an unknown regime switching regression to identify two labor market sectors --a high wage primary sector and a low wage secondary sector. Here we estimate a model where worker's wages are determined by one of three wage equations: a union wage equation, a nonunion primary equation or a nonunion secondary equation. If individuals are in the union sector their sector is treated as known. If they are not then their sector is treated as unknown. Parameter estimates for this model suggest that union/nonunion differences are very large for average workers even when comparing union and nonunion primary workers. We continue to find distinct primary and secondary sectors with wage equations similar to those that would be expected from the dual market perspective. Since it appears that union workers may be receiving large wage premiums it seems likely that there is non-price rationing of union jobs. If there is, our finding inprevious papers of non-price rationing of primary sector jobs may have been due only to the rationing of union jobs. We test for the existence of non-price rationing of nonunion primary sector employment in this three sector model and continue to find evidence that at least black workers find it difficult to secure primary sector employment.

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.

Book Review of, The Nature of the Game: Links Golf at Bandon Dunes and Far Beyond by Mike Keiser with Stephen Goodwin (review)

In 1999, Mike Keiser and his associates welcomed golfers to a new and remarkable links golf course on the southern Oregon coast near the town of Bandon. At the mouth of the Coquille River and small bay some thirty miles south of Coos Bay, Bandon had begun as a mining camp in the 1850s and developed an economy in the late nineteenth century based on fishing, logging, dairying, and cranberry cultivation. The area’s spectacular coastline brought tourists, but nothing quite prepared the town for the advent of world-class golf courses — six in total at Bandon Dunes — and an influx of golf tourists that propelled the destination resort to be an economic linchpin in Bandon

The Design of a multiple position turret for changing robot end effectors

This paper discusses the design and build of a multiple position turret used to simultaneously attach six end effectors to a four-degree of freedom Adept robot. The main objective of this thesis is to develop a prototype tool changer that is different, more cost effective, and offers more features and versatility than any other. Use of the turret allows the robot to quickly change the end effector in use by simply rotating any of the others into the ready position. This reduces the tool changing time in a high-speed assembly process that is normally associated with conventional tool changers disconnecting one end effector and picking up another. Employing the turret concept in a robotic assembly operation will also lengthen the life of the robot because there are fewer moves that have to be made by the robot itself. The turret is approximately 8 inches high, 7 inches wide and its turntable is 6.25 inches in diameter. This small envelope is a large benefit over the bulky system that would be needed for the more traditional tool changers. The turret\u27s weight while populated with six small end effectors is approximately 10.5 pounds. The cost of the turret, not including end effectors, is approximately $5,500

The 2017 Session of the Nevada Legislature and the Failure of Higher Education Reform

Executive Summary This report analyzes 11 bills introduced during the 79th Session of the Nevada Legislature that proposed to reorganize, reform, and realign various aspects of the state’s higher education system. The analysis reveals the following: Despite bipartisan support for higher education reform, nearly all of the reform bills failed, including two bills vetoed by Governor Brian Sandoval. The failure to enact meaningful reform stands in contrast to the implementation of bills appropriating more resources for higher education. Opposition to reform legislation was strongest among those most invested in legitimizing and perpetuating current arrangements. The report also considers the institutional and cultural factors that reinforce these outcomes. These factors include: The mismatch between legislative capacity and the demand for policy reform. The selective manner in which higher education officials engaged in the Legislature. Misconceptions about the components of the state’s land-grant institution and the Board of Regents’ constitutional carve out prohibiting legislative action. The report concludes with policy recommendations for the Nevada Legislature. Foremost among these are: The second passage of AJR 5, an override of the AB 407 veto, and reintroduction and passage of the failed reform bills. Separation of the governance of the two- and four-year colleges from the branches of the state university, reduction in the size of the Board of Regents, and reorganization of the administration of higher education. Developing separate funding formulas for the universities and the two- and four-year colleges, and adding funding weights for courses completed by first generation, minority, and Pell Grant eligible students. Creation of the Assembly and Senate Higher Education and Economic Development Committees to improve legislative oversight and coordination. Elevation of Great Basin College to a four-year institution and realignment of the two and four-year colleges’ service areas to facilitate regional economic integration