Labor Market Segmentation and Job‐Related Risk

. Labor market segmentation theory calls into question the neoclassical theory of compensating wage differentials, which posits that workers are compensated for job‐related risk. From the perspective of segmentation theory, one would expect secondary workers to experience greater risk on the job with less likelihood of compensation. An empirical examination of worker samples, using discriminant analysis to construct primary and secondary subsamples, reveals that the wages of primary workers vary directly with the probability of job related death, injury and disease. No such relationship holds for secondary workers, who are also shown to experience significantly higher levels of job related risk and disamenity than their primary counterparts.