Segmented Labour Markets
- There are barriers that exist to the free movement of workers between different sections of the labour market
- In reality, there are also a number of different labour markets
- If there were no barriers to entry of exit in labour markets, workers would move from low-wage jobs to high-wage jobs, which would equalise wages.
- However, some barriers to entry increase efficiency of labour markets
- For example, one would want a surgeon to be fully qualified, and one would want a taxi driver to have a license.
- Some barriers, however, may be unnecessary and could be used to just push up particular workers’ wages.