employment practices in the dual economy

YINON COHEN AND JEFFREY PFEFFER*

Employment Practices in the Dual Economy

EMPIRICAL RESEARCH IN THE DUAL ECONOMY TRADITION has tended to follow one of several lines. Among investigators concerned with the effects of positional attributes such as industry on workers’ attainment, there has been increasing interest in how “features of the macroeconomy affect conditions of employment for individuals” (Wallace and Kalleberg, 1981, p. 77). However, surprisingly little empirical attention has been focused on the relationship between economic sectors and labor market processes. This is in spite of the fact that the connection between the structure of the economy and the organization of the employment relationship is prominent in a number of attempts to account for income inequality, wage determination, and the type of control of the labor process (e.g., Beck et al., 1978; Edwards, 1975, 1979).

Although some authors have argued that the correspondence between industrial sector location and labor market segment is not complete (Althauser and Kalleberg, 1981; Piore, 1970; Baron and Bielby, 1980; Hodson and Kauhan, 1982), the case for a more complete correspondence is made frequently. In fact, the basic premise of much recent writing on the employment relation is that the nature of this relation, in terms of the form of control of the labor process which leads to specific employment practices, has been dictated by the development of the U.S. economy into two qualitatively ddferent industrial sectors+ore and periphery (Edwards, 1975, 1979; Gordon, 1972; Gordon, Edwards, and Reich, 1982; O’Connor, 1973). In turn, these sectors are posited as corresponding to a primary and a secondary labor market, respectively (Hodson and Kaufman, 1982).

The purpose of this paper is to empirically examine whether or not there are significant associations between an establishment’s industrial sector location

*The authors are, respectively, Postdoctoral Fellow, National Institute of Mental Health, Organizations Research Training Program, Stanford University, and Professor of Organizational Behavior, Graduate School of Business, Stanford University.

INDUSTRIAL RELATIONS, Vol. 23, No. 1 (Winter 1984). 01984 by the Regents of the University of California. 0019/8676/84/215/58/$10.00

58

Employment Practices in the Dual Economy I 59

and a large number of employment practices that have been taken to be defining characteristics of labor market segmentati0n.I This focus helps to move the debate over the usefulness of dual economy theory away from a concern solely with differences in attainment processes (Zucker and Rosenstein, 1981; Tolbert et at., 1980; Beck et at., 1978) towards considering whether there is evidence for differences in employers’ labor market behavior across economic sectors. We examine aspects of the relationship between industrial sector and labor market practices by drawing from the literature general and specific hypotheses and then testing these using data from a sample of more than 300 Northern California employers. Our results are mixed. The connections between sectoral location and labor practices are not consistent, and there is no evidence of segmentation into primary and secondary labor markets. These empirical findings seriously challenge dual economy theorists’ assertion that the structure of the economy significantly affects labor market processes and is ultimately responsible for the emergence of segmented labor markets.

Dual Labor Markets and Employment Practices In dual labor market theory, the primary sector is “characterized

by high wages, relatively good working conditions, employment stability, and opportunities for advancement. ” The secondary sector is characterized by “low wages, poor working conditions, high labor turnover, and little chance for advancement. High turnover is explained by the absence of highly developed internal labor markets, unstable product demand, and a workforce prone to turnover” (Rosenberg, 1980, p. 34). The theory presumes that there are barriers to mobility between the labor market sectors (Hodson and Kaufman, ,1982). Such barriers emerge because of the existence of internal labor markets with limited ports of entry and because of the different availabilities of on- the-job training and the poor job histories of secondary market workers. Presumably in confronting employment instability and little training, such workers never acquire the requisite human capital and evidence of stability that would make them desirable employees (Gordon, 1972).

Many studies of labor market structure attempt to distinguish between primary and secondary markets on the basis of some set of characteristics such as wages, working conditions, skill requirements, and employment stability (e. g., Rosenberg, 1980). Since blacks are concentrated disproportionately in the secondary labor market, some studies also have used black-white com- parisons to assess dual labor market theory (e.g., Leigh, 1976).

‘The authors wish to thank Jim Earon and Mark Granovetter for helpful comments on an earlier draft.

60 / YINON COHEN AND JEFFREY PFEFFER

Edwards (1975) has criticized this focus on labor market processes as a narrow approach that has yielded little more than taxonomies. He contends that observed differences in wages, unemployment, and mobility are best explained by investigating the “institutional arrangements governing production” (p. 4). Edwards argues that the distinction among labor market sectors, described by Doeringer and Piore (1971), emerged naturally from the development of the capitalist system and requirements for the control of workers that differed substantially between the large corporations in the monopoly sector and smaller firms facing more competitive environments. Distinguishing between bureaucratic and simple hierarchical control, Edwards (1975, p. 4) asserts that “the position of a firm in the monopoly capitalist system . . . largely determines the nature of control (i. e., simple hierarchy or bureaucratic control) within that firm,” which in turn determines the firm’s labor market practices2

Edwards’ arguments need not be detailed here. Suffice it to say that he, along with others (e.g., Bluestone et al., 1973; Tolbert et al., 1980; Gordon et al. , 1982), posited a causal relationship between labor market processes and an industrial structure consisting of two sectors--core and periphery. Thus, the general hypothesis is that core firms are likely to offer primary jobs and to follow primary labor market practices, while firms in the periphery are likely to offer secondary jobs and follow secondary labor market practices. This general hypothesis can be further refined to focus on some specific employment policies and practices.

Employment stability. Economic instability is considered an important feature distinguishing primary from secondary jobs and the core from the periphery (Bluestone et al . , 1973; Gordon, 1972; Gordon et al., 1982; O’Connor, 1973). Firms in the core, by virtue of their monopoly power, exercise some degree of control over their environment and succeed in keeping their employment levels stable (Edwards, 1975). Establishing promotion ladders, filling jobs from within the firm, and expanding staff roles are possible only with stable product demand and stable employment. Core firms face more stable demand because of the presumably greater control over their environments; and even when faced with fluctuating demand, presumably alter subcontracting practices to transfer employment instability to other firms in their environment (Gordon et a1 ., 1982). Thus, the basic premise of dual labor market theory is that core firms are less likely than periphery firms to experience fluctuating employment.

%Edwards (1979) subsequently expanded his model to include a two-tiered segmentation within the primary labor market. This refinement, however, does not alter his basic thesis that sectoral location determines the type of control which, in turn, determines labor market practices. Moreover, the most important characteristics of primary jobs-employment stability and a clear career path-exist in both tiers of the primary market (Edwards, 1979).


As a corollary, there should also be higher labor turnover in the periphery than in the core. Core firms presumably rely extensively on internal labor markets and career ladders as mechanisms of control. Edwards (1975) for instance notes, “Bureaucratic control fostered employment stability by creating career ladders and instituting rewards for tenure and seniority within the firm.” Thus, the use of career ladders should decrease labor turnover in core as compared to periphery firms.

Training and promotion. Core firms are also believed to invest more in training than firms in the periphery (Hodson and Kaufman, 1982). Investment in training makes no sense if the firm faces a situation of fluctuating demand (and consequent fluctuations in employment). Fluctuating employment levels mean that the firm will not be able to recoup all of its investment in building human capital among its workforce. And, in order to hold workers once training has occurred, firms must be able to pay higher wages and to offer promotion opportunities. Thus, the perspective would argue that core firms are more likely to invest in training than are firms in the periphery; and that core firms are more likely to follow policies aimed at minimizing layoffs and voluntary quits.

One such policy is promotion from within. Internal labor markets are defining characteristics of firms in the core (Hodson and Kaufman, 1982; Edwards, 1975, 1979; Gordon et a1 ., 1982). Employers in the periphery have neither the economic incentives nor the wherewithal to organize employees in internal labor markets. Thus, core firms are hypothesized as being more likely to follow policies of promotion from within. Consequently, other things equal, it is expected that a similar worker, holding a similar job, is more likely to be promoted if working in a core firm than in one located in the periphery.

Pensions. Employment stability and training are related to each other and are both thought to be characteristic of core establishments. As Goldberg (1980) has argued, if workers develop human capital that makes them valuable to their current employer, one way of ensuring their retention is by offering them compensation in deferred form. One of the most prominent forms of deferred compensation is pensions. Pensions require continual employment over some often substantial period of time for any of the benefits to be obtained. Thus, we would expect that firms in the core, more concerned with employment stability and worker retention, should be more likely to offer pension plans than those in the periphery.


Workers’ characteristics. It is clear that those theorists specifying a connection between dual economic sectors and labor market outcomes believe that the economic fortunes of workers are determined by their sectoral location (e.g., see Bluestone et al., 1973). Employment in a core firm leads to training opportunities, advancement possibilities, and job security. To the extent that sectoral location determines an individual’s economic success and job conditions, the explanation for how some workers are sorted into the core and others into the periphery also contributes critically to a theory of income inequality and income determination.

Dual labor market theory has a simple explanation of this matching process. Workers’ behavioral traits and characteristics are a key factor in explaining who gets jobs in the core. Piore (1970, p. 54) has noted, “Insofar as secondary workers are barred from primary jobs by real qualifications, it is generally their inability to show up for work regularly and on time. Secondary or periphery firms are more tolerant of workers’ instability, absenteeism, and lateness. This is because work in the periphery is organized so that it will not be disrupted by such behavior. Secondary firms rely heavily on part-time workers and are thought to offer jobs of such short duration that worker attachment to the labor force does not matter. In the low- or no-skill jobs that characterize the periphery, turnover is neither costly nor problematic. Thus, it is hypothesized that core employers are less likely than periphery employers to hire workers they believe to be unstable. Employers in the periphery are presumed less concerned with employee qualifications generally.

The dual economy-dual labor market perspective, in sum, argues that there are fundamental qualitative differences in the control processes in the two economic sectors which emerge from the structure of the economy. These differences in the macroeconomy are translated into differences in employment practices and policies, creating a dual labor market structure which corresponds to the dual economy. If this argument is correct, then employment practices and policies in the two sectors should differ according to the hypotheses just presented. In the next section we investigate whether or not such differences exist.

,,

Sample We examine the relationship between economic sector and

labor market policies and practices using data from a sample of 309 employers in the San Francisco Bay Area. The data were collected during the 1966- 1968 period and were previously summarized by Gordon and Thal-Larsen (1969). The 309 employers are a one-fifth sample representative of the universe of Bay Area establishments then employing over 100 employees. Manufacturing

Ernployment Practices in the Dual Economy I 63

establishments are somewhat overrepresented compared to their numbers in the population of all establishments of this size, while trade and service establishments are somewhat underrepresented.

Information about recruitment, hiring, promotion, wages, turnover, and other topics was not obtained from records, but was provided by officials from each establishment during interviews.

Industq cZass$cation. There have been criticisms of analyzing labor market processes at the industry level of analysis (Baron and Bielby, 1980, 1983; Baron, 1982); nevertheless, virtually every dual economy approach for defining economic sectors classifies firms by industry (Tolbert et al., 1980). This follows logically from the theoretical emphasis in the dual economy literature on the critical importance of market power. Since a firm's oligopolistic position is primarily a function of the industry in which it operates, it is clearly in the spirit of those theories that have emphasized the emergence of labor market practices from the structure of the economy to emphasize industry attributes and a classification of establishments based on industry location.

Of the several existing classifications of industries into core and periphery sectors (Bibb and Form, 1977; Hodson, 1978; Beck et al., 1978; Oster, 1979; Tolbert et al., 1980), we used the classification developed by Tolbert et a l . (1980) for categorizing establishinen ts. Their classification was derived from a factor analysis performed on the underlying dimensions distinguishing the core from the periphery, and is related to differences in attainment processes for individuals in the two sectors. Using this classification, there are 214 (69 per cent) core and 95 (32 per cent) periphery establishments in our sample. The dependent measures are described as the results are presented.

Results Table 1 presents characteristics of establishments in the sample.

The descriptive data challenge some of the assertions of the dual economy approach. Core establishments are presumably more likely to be unionized, to be larger, and to grow more than those in the periphery. Size and unionization are two of the defining characteristics used by Tolbert et al . (1980) in classifying industries into sectors in the first place. Yet, examining the per cent of employees in the sample covered by a collective bargaining agreement reveals no difference between establishments in the two sectors. Similarly, there is no evidence that core firms have grown inore in the recent past, and although

a complete description of the sample and its characteristics. including its representativeness to both Bay Area and national establishments, see Gordon and Thal-Larsen (19691. Because the sample consists only of establishments of over 100 persons. generalization to smaller firms may not be warranted.


a larger proportion of establishments in the core have more than 1,000 employees, the overall difference in the size distribution is fairly slight.

Dual labor market theorists presume that employment is more stable in the core than in the periphery. This relative difference in stability is argued to produce higher unemployment in the periphery and to shape job histories that make career progress and transition out of the periphery difficult. The data in Table 2 indicate, however, that with only two exceptions, there are either no statistically significant differences between the two sectors or the differences are in a direction opposite to that predicted. Although firms in the core are more likely to report having a program to reduce layoffs and quits, core firms are also more likely to report having unpredictable fluctuations in employment. There is no difference in the two sectors in terms of seasonal fluctuations in employment.

Given these findings, it is not surprising that establishments operating in the periphery do not report higher rates of quits or layoffs than those in the core for all of the eight broad occupational categories. Although the data do not permit a test of the argument that job tenures are longer in the core, there is no indication of greater employment instability in the periphery than in the core.

TABLE 1

SELECTED CHARACTERISTICS OF BAY AREA ESTABLISHMENTS BY ECONOMIC SECTOR (PER CENT)

Periphery (N =95)

Core (N = 214)

Type of establishment: Single unit Branch unit Headquarters

Total

42.6 23.4 34.0

100.0

14.6 50.2 35.2

100.0

Number of employees: 100-249 256999 1,OOO or more

Total

44.2 42.1 13.7

100.0

44.1 38.8 20.0

100.0

Change in size since 1 W : Substantially increased Substantially decreased Only slight changes Fluctuates

Total

49.5 9.5

37.9 3.2

100.0

49.1 11.3 32.5 7.1

100.0

Per cent of employees covered by collective bargaining agreements:

zero (no union) 1 5 0 Over 50

Total

23.1 13.2 63.8

100.0

24.6 10.9 64.5

100.0


TABLE 2

MEASURES OF EMPLOYMENT STABILITY AND TRAINING IN 309 ESTABLISHMENTS BY ECONOMIC SECTOR (IN PER CENT)

Proportion of firms: Periphery Core

Having none or only few quits or layoffs’

Professional and technical Managers and officials Clerical Sales Skilled Semiskilled Unskilled Service

Having seasonal fluctuations in employ meut Having unpredictable fluctuations in employment With a program to reduce layoffs With a program to reduce quits

21.1 28.0 11.7 18.2 12.9 12.9 6 . 9

13.3 32.6

8 .4

33.0 43.3

Blaming layoffs on nature of workb 14.7 Blaming quits on nature of workers. Laying off immediate19

19.7 94.4

Using subcontracting to prevent 0 . 0 employment fluctuations Using subcontracting 62.1 Providing at least one form of training‘ 66.3

* p< .05, using Chi-square tests. ’Frequencies are based on the number of establislirnents employing these occupational groups. hFrequencies are based on total number of establishments with no program to reduce layoffs. ‘Frequencies art‘ based on total number of establishments with no program to reduce quits. dFreqiiencies are based on total number of establishments laying off workers. “Types of training: On-the-job training; vestibule training, outservice training; apprenticeship program.

23.9 30.6 12.3 17.7 17.5 5.7 5.7

10.2 30.8

27.1*

57.5* 55.5* 29.4*

91.0 20. 8

5.1*

72.1* 82.2*

~

Although there are similar levels of quits and layoffs in the two sectors, as noted above, there is a higher percentage of establishments in the core that follow programs aimed at reducing layoffs and quits. Since core establishments in the sample report a greater likelihood to experience abrupt employment fluctuations, the sectoral difference in quiaayoff programs may reflect a greater need to manage employment instability in the core than in the periphery. Once establishments face fluctuating labor demand, there is no evidence that firms in the core are more likely than those in the periphery to reduce the work week before resorting to layoffs. Of those establishments not following programs to reduce quits, similar proportions in each sector maintain they do this because of the nature of workers’ characteristics. And contrary to expectations, establishments in the core are more likely than those in the periphery to account for layoffs by reference to instability of their environment.

One specific method of potentially reducing employment instability is the use of subcontracting. Of the 11 firins reporting using subcontractors to


prevent employment fluctuations, all are in the core, and thus, this difference is consistent with that expected by the dual economy approach (see Table 2). However, the difference in the two sectors in terms of proportions actually using subcontracting is small, although significant.

As subcontracting may help reduce layoffs, deferred compensation may decrease quits. Of the sample periphery establishments, 92.6 per cent reported having a pension plan, compared to 92.5 per cent of establishments in the core. Thus, there is no difference between the two sectors in the proportion employing this form of deferred compensation.

As shown in Table 2, establishments in the core are twice as likely to provide their employees with at least some training as those in the periphery. This is consistent with the dual economy prediction that training is more likely to be provided in the core sector.

Table 3 presents the results for promotion opportunities and the existence of internal labor markets. Most establishments in the sample-whether in the core or the periphery-follow a policy of promotion from within. There is no significant difference in the proportion of core and periphery establishments claiming that “all, or almost all jobs are filled from within.” However, establishments in the core are somewhat more likely to report that all their jobs are “promotable” (jobs from which one can be promoted). Thus, while there is some support for the dual economy predictions about differences between the sectors in internal labor markets, these differences are neither consistent nor particularly strong.

Further examination of promotion opportunities indicates some, but relatively few, of the expected differences between core and periphery establishments. Twice as many firms in the core report having promoted most employees with at least five years of service, indicating that the core firms are characterized by greater intraorganizational mobility prospects based on tenure. On the other hand, about the same percentage of firms in the core and periphery report custodian and secretary positions as being unpromotable, and about the same proportion of manufacturing firms report promoting unskilled to semiskilled and semiskilled to skilled jobs. Also, there is no difference in the proportion of establishments in the two sectors reporting having a promotable job for a high school graduate with no experience, though a higher proportion of core establishments report having a promotable job for a college graduate with no experience. The fact that about one-half of the establishments in the core sector do not frequently promote either their unskilled or semiskilled workers is another indication of a heterogeneity among core firms that is inconsistent with dual economy predictions.

Employment Practices in the Dual Economy 1 67

TABLE 3

MEASURES OF PROMOTIONAL OPPOIITUNITIES A N D POLICIES BY ECONOMIC SECTOR (IN PER CENT)

Proportion of firms: Periphery Core

Following a promotion from within policy Promoting “most employees with at least 5 years of service”

as unpromotable That categorize secretaries 12.6 as unproinotable With all jobs “promotable” 27.4

to semiskilled. Frequently promoting semiskilled 50.0 to skilie& With all jobs filled from within 15.8 With a promotable job for high 86.2 school graduate with no experience With a promotable job for college 46.7 graduate with no experience

*p < .05. dAmong 110 manufacturing establishments only, including eight in the periphery and 102 in the core.

82.8 30.3

That categorize custodians 8.4

Frequently promoting unskilled 57.1

91.7* 60.2*

6.5

18.2

42.1* 66.0

42.0

21.5 89.2

67.3*

The dual economy notion that the principal determinant of a worker’s success in getting a job in the core rests in his or her ability to signal stability, punctuality, and regularity is not supported by the results in Table 4. Core and periphery establishments are equally unwilling to hire unstable workers- the long-term unemployed, ‘2ob hoppers,” and mothers with young children- all frequently perceived as prone to absenteeism, turnover, and lower attachment to the labor force. The only statistically significant difference is that core establishments are more reluctant to employ people who live far away. That workers’ perceived instability does not explain their confinement to the secondary labor market has also been found in analyses based on individual- level data. Rosenberg (1980), examining the occupational mobility of both blacks and whites in low income areas in four cities, found differential stability in employment was not a sufficient explanation for who moved and who stayed in the secondary sector.

The differences between the core and periphery in worker characteristics should be manifest also in selection and screening. Thus, not only should establishments in the core be more reluctant to hire “unstable” or undesirable workers, they should presumably screen more carefully the persons they do hire. In the first two columns of Table 5, we present the per cent of the establishments in each sector that bar employment by persons with a police record for each of the occupational groups. The differences between the two


TABLE 4

PER CENT OF ESTABLISHMENTS EXPRESSING “MARKED RELUCTANCE TO HIRE” BY ECONOMIC SECTOR

Periphery Core

Long-term unemployed 38.5 42.9 “Job hoppers ” 67.0 72.2 Mothers with children 23.0 15.0 Physically handicapped 15.4 23.7 Persons living far away 15.4 25.5**

~~~

**p < .lo.

TABLE 5

PER CENT OF ESTABLISHMENTS BARRING EMPLOYMENT FOR PERSONS WITH POLICE RECORDS, REQUIRING EDUCATIONAL CREDENTIALS, AND GIVING TESTS FOR PROSPECTIVE

EMPLOYEES, BY OCCUPATION AND ECONOMIC SECTOR’

Occupational category Educational

requirementsb Police record Test for hiring Periphery Core Periphery Core Periphery Core

~~~ ~ ~

Professional

Managers Clerical Sales Skilled Semiskilled Unskilled Service

and technical 27.8 28.4 85.3 70.9 59.2 43.1 37.4 30.3

47.3* 36.4 85.5 90.6* 57.5 44.4 36.4 33.8

28.8 26.3 26.3 20.0 26.8 18.5 22.2 26.3

16.2* 15.0* 13.1* 12.9 10.7* 9.6** 9.7*

12.7*

23.9 14.9 52.1 32.7 24.3 20.3 21.1 16.0

34.8 25.8* 62.1 41.0 34.5 33.3* 29.5 27.5*

*p < .05; **p < . lo. ’Percentages are based on total establishments employing these occupational categories. Tol lege degrees for professional, technical, and managerial workers; high school degree requiremennts for all other categories.

sectors are consistent, but not as predicted. Establishments in the periphery, rather than those in the core, are more likely to bar persons with police records from employment.

The results for the use of educational credentials by occupational group and economic sector are displayed in the middle columns of Table 5. Consistent with dual economy predictions, establishments in the core are somewhat more likely than those in the periphery to use educational credentials, but the difference is significant for only two occupational groups-professional and technical and salespeople. There is virtually no difference in the use of high school credentials for clerical or any of the blue-collar occupational groups. Collins (1979) has argued that education not only provides human capital but also can denote socialization into middle-class norms and thus may signal employment stability. To the extent that education is a proxy for skills and stability, the fact of so few significant differences in credentials between

Employment Practices in the Dual Economy f 69

establishments in the two sectors would seem to call into question both the matching-of-persons-to-sector argument and the position that jobs in the core are, on the whole, technologically more demanding in terms of skills required.

As seen in the last two columns of Table 5, there are more consistent and more substantial differences in the use of tests (including unwritten tests) between establishments in the two sectors. As expected, those in the core tend to use tests more, and this pattern is consistently observed across all of the occupational groups although the differences are not always statis tically significant. Thus, it does seem evident that core establishments rely on tests for screening more than periphery firms do.

These data on employment screening practices in the two sectors provide little support for dual labor market theory’s emphasis on sorting, matching, and confinement of workers by economic sector. There is no difference in reluctance to hire job hoppers or other employees with presumably intermittent attachment to the labor force; firms in the periphery are actually more likely to screen on the basis of having a police record; and although core establishments use tests more, there is very little dfierence in the use of educational credentials for selection. Thus, again, differences between the sectors are inconsistent.

Discussion In this study, we used hypotheses drawn from dual economy

theory to isolate potential differences in employment practices that would distinguish between the sectors, and then we tested empirically to see if these differences existed. The results are mixed. On the one hand, establishments operating in the core sector are more likely to have programs to reduce quits and layoffs, are more likely to subcontract and to subcontract to prevent employment fluctuations, are more prone to provide at least one type of training, have a greater tendency to have a promotion within policy, and are more likely to make use of tests as a screening device in the hiring of new employees. On the other hand, core establishments, for the most part, were not more prone to use educational credentials for screening, were not more likely to have deferred compensation in the form of pension plans, were not more reluctant to hire unstable workers, were not more likely to promote from the unskilled to the semiskilled or the semiskilled to the skilled ranks, and had more unpredictable fluctuations in employment than establishments in the periphery. Furthermore, establishments in the periphery were more likely to screen employees on the basis of having a police record than those in the core. And, core firms were not more likely to blame quits on the nature of the workers involved. Thus, the labor market segmentation that has been assumed to characterize sectors seems not to occur, although


some of the predicted differences do occur in some employment practices. Althauser and Kalleberg (1981) argue that the expectation of a relationship

between economic sector and labor market characteristics is too simplistic. They note (p. 140), “There is reasoning and evidence enough to justify a framework in which labor markets represent a level of analysis distinct from economic sectors based on firm characteristics.” This revised dual economy tradition holds that there are primary jobs and secondary jobs in firms in all economic sectors (Gordon et al . , 1982). The question then shifts to one of understanding the forces and processes that produce different labor market structures in different situations and for different occupations and groups of workers.

This position is appealing on its surface, as it helps to explain the absence of relationships between economic sector and labor market characteristics reported here. Yet, the position really provides no resolution to the problem of why employment practices look as they do. To start again characterizing jobs by primary or secondary characteristics is to do what Edwards has already criticized: look for taxonomies with no theoretical import or interpretation. And, by admitting that there may be no or few connections between the macroeconomy and conditions of employment, such an approach calls into question the analytical framework developed b y Edwards (1979) and others (e.g., Gordon, 1972; Gordon et d., 1982; Braverman, 1974).

As Baron and Bielby (1980) have pointed out, the problem with dual economy theory is fundamental. In reifying economic sectors, it overlooks more microlevel variables that may explain conditions of the employment relationship. Work structures are determined more by the technical and administrative arrangements within firms than by some macroeconomic imperative arising from industrial sector location. It may be argued that to the extent economic dualism exists, it is firm size, technology, geographical location, and the nature of the environment, rather than industrial classification, that determine firms’ sectoral location (Baron and Bielby, 1983; Averitt, 1968). Although this approach is more sophisticated than the one examined here, it fails to explain why firms should converge into two sectors rather than to three, four, or some other number. Furthermore, there is little evidence, either theoretical or empirical, to support economic dualism based on firms’ characteristics. Thus, analysis of the determinants of the employment relationship should proceed from theoretical perspectives tied more directly to the organizational level of analysis, without a priori notions of economic dualism.

Perhaps most telling, dual labor market-dual economy theory seems to fail, at least in these data, to tell us why secondary workers do not have primary jobs. In the small differences in worker characteristics and employers’ re-


quirements, we do not see the mechanisms that presumably sort workers into different segments of the labor market. Thus, this approach ultimately fails as a theory of income determination or inequality (Granovetter, 1981). The sources of income differentiation and stratification would be better pursued from some other perspective(s).

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employment practices in the dual economy

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