Industrial Segmentation and Labor Market Discrimination

Abstract

The economic segmentation literature suggests two mechanisms by which the inferior position of minority within the socioeconomic structure of industrial capitalism is perpetuated. The first is the differential allocation of minority labor to different segments of the industrial economy, and the second is the differential evaluation of minority credentials within different industrial segments. Using data from the 1976 Current Population Survey we evaluate each of these two mechanisms. We find that while there are significant earnings costs due to the differential allocation of minority labor into the labor-intensive sector of the economy, the dollar costs of the differential evaluation of minority credentials are far greater. This is especially apparent in the capital-intensive sector where the penalties paid by minorities are substantial, especially for white females but also for nonwhites of either sex.