Job displacement in the dual labor market

This study examines the impact of permanent job loss on the occupational and financial losses (and gains) of displaced workers using a (worker-level) dual labor market approach. Specifically, the analysis shows the relative probabilities of displaced workers transitioning to employment or unemployment status, in either the primary or secondary labor markets, by identifying the predictors of downward mobility, upward mobility, and prolonged periods of unemployment. The use of the dual labor market conceptualization in evaluating labor market transitions allows economic conditions (i.e. employment rates, employer demand for labor) to vary across (primary and secondary) industrial sectors and alter reemployment prospects for various labor market participants differentially. The conceptual model consists of eight "states" or labor market locations. Outcomes for each displaced worker are measured once for the transition out of work to unemployment (Time 1/T1) and once for the transition out of unemployment to employment (Time 2/T2). The key findings of this study are characterized by the pervasiveness of the discrimination variables that improve the likelihood of negative outcomes for both PLM and SLM workers. Minorities, women, and immigrants, regardless of labor market origin, are more likely to experience downward mobility (PLM), less likely to improve their occupational situation (upward mobility), and stay unemployed for a longer period of time than white, native-born, males. Thus, discrimination remains a significant factor in predicting labor market outcomes for displaced workers. In addition, union membership is an important factor which improves displacement outcomes, while discouraged workers who cease active job search prematurely, are likely to experience downward mobility. In addition, a discriminant analysis model shows a clear distinction between labor markets. Although only two broad strata (PLM/SLM) and two sub-strata (Full Time-Part Time) were used in this study, major differences were found among the eight groups in terms of their demographic characteristics and labor market outcomes. A combination of policies that resolve structural barriers and wide-spread discrimination and stigmatization of minorities, women, and immigrant workers must be identified in order to reduce inequality in the labor market. Cultural awareness training, job search support, and some regulation of capital are important policies to consider.