Background
Studying urban poverty in the 1960s, Doeringer and Piore noticed that training alone did little to improve the position of Black and low-skilled workers. In Internal Labor Markets and Manpower Analysis (1971) they argued the labor market is divided into two qualitatively different sectors.
Primary and secondary sectors
- Primary: large firms and the public sector, with good pay, job security, promotion and union protection, often organised as internal labor markets shielded from outside competition.
- Secondary: low pay, insecurity, no career ladders and arbitrary supervision, with high turnover and little skill formation.
Piore later split the primary sector into upper (professional, managerial) and lower (skilled manual) tiers.
Critique of human capital theory
Human capital theory explains wage gaps by education and skill. Dual market theorists argue that equally able workers fare differently depending on which sector they enter, and unstable secondary careers label workers as unreliable.
Extensions
Reich, Gordon and Edwards (1973) offered a radical account of segmentation as a strategy to divide workers. Piore's Birds of Passage (1979) showed migrants filling secondary-sector jobs in rich countries.
Korea
Gaps in pay and social insurance coverage between large-firm regular workers and SME or non-regular workers, with low mobility between them, are discussed in Korea as labour market dualism, including in the 2015 tripartite agreement.
References
- Doeringer, P. B., & Piore, M. J. (1971). Internal Labor Markets and Manpower Analysis. D. C. Heath.
- Piore, M. J. (1979). Birds of Passage: Migrant Labor and Industrial Societies. Cambridge University Press.
- Reich, M., Gordon, D. M., & Edwards, R. C. (1973). A theory of labor market segmentation. American Economic Review, 63(2), 359-365.