Investigating Dual Labor Markettheory for Women

Using a switching model with unknown regimes, this paper demonstrates that the women’s labor market is significantly better described by two wage setting mechanisms than by one. Though the evidence is consistent with the hypothesis that women may be rationed into the sector with low wages, the sectors do not entirely conform to traditional notions of dual labor markets and to results from the men’s labor market. Both sectors have different patterns of rewards to human capital formation which explains the different patterns of labor force attachment in the two sectors.