Labor Markets (Sociology)

Introduction

The sociology of labor markets is a large and diverse field reflecting the varied connotations of the concept of a “labor market” itself. An abstract but useful definition is provided in “The Sociology of Labor Markets” (Kalleberg and Sørensen 1979, cited under General Overviews), which defines labor markets as arenas where exchanges are made between workers and employers. In labor markets, workers are said to offer their labor power to employers in exchange for various rewards associated with employment, including wages, power, and status. Labor markets are a fundamental institution because of their central role in distributing rewards that are tied to one’s social and economic status in society. As such, how labor markets operate is of keen interest to scholars interested in inequality and other areas of sociological inquiry. In contrast to economists, sociologists tend to view labor markets as fundamentally social institutions. This means that economic considerations do not tell the whole story, and in the sociological view, customs, rules, and relationships profoundly affect exchanges in the labor market. A large segment of sociological work on labor markets seeks to show how factors that are traditionally considered noneconomic affect the operation of labor markets and shape economic outcomes more generally.

General Overviews

Newcomers to the field may find much of the reading on labor markets unusually challenging due in part to the multitude of theoretical approaches and concepts. The cross-disciplinary nature of the field compounds this, with ambitious readers often finding themselves veering into highly technical work in labor economics and other unexpected destinations. Also there are no introductory-level textbooks devoted to the sociology of labor markets. That said, there are some excellent readings that provide the reader with the “big picture” through well-crafted overviews. For example, Kalleberg and Sørensen 1979 is an excellent jumping-off point, while Berg 1981 and Berg and Kalleberg 2001 provide deeper treatments of many centrally important topics. For an outstanding introduction to economic sociology, which will aid in understanding sociological perspectives on labor markets, one should read Smelser and Swedberg 2005. Readers who are interested in labor market inequality will benefit by reading England 1992, and England and Farkas 1986 provides a lucid treatment of how household dynamics and the labor market interact. For a collection of the classics as well as more contemporary work, Grusky, et al. 2008 is a must-have. The review in Kerckhoff 1995 is particularly useful for understanding the status attainment perspective in sociology and, more generally, the role of various labor market institutions in the process of stratification.

Berg, Ivar E., ed. 1981. Sociological perspectives on labor markets. Quantitative Studies in Social Relations. New York: Academic Press.
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With an emphasis on demand-side factors, this impressive collection of theoretical and empirical contributions is a must-have for those interested in various sociological viewpoints—as well as in focused empirical work—on labor markets.
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Berg, Ivar E., and Arne L. Kalleberg, eds. 2001. Sourcebook of labor markets: Evolving structures and processes. Plenum Studies in Work and Industry. New York: Kluwer Academic/Plenum.
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This important and wide-ranging collection examines a range of central topics for labor market research, including employment relations, stratification patterns and economic outcomes, and labor market policies.
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England, Paula. 1992. Comparable worth: Theories and evidence. Social Institutions and Social Change. New York: Aldine de Gruyter.
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Focused on wage inequality by gender. Especially noteworthy is chapter 2, which is one of the most useful general expositions of labor market theories available. A great place to begin one’s readings on the topic.
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England, Paula, and George Farkas. 1986. Households, employment, and gender: A social, economic, and demographic view. New York: Aldine de Gruyter.
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An important book linking household dynamics and employment. The section on employment will be especially useful to beginning readers on the topic.
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Grusky, David B., Manwai C. Ku, and Szonja Szelényi, eds. 2008. Social stratification: Class, race, and gender in sociological perspective. 3d ed. Boulder, CO: Westview.
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A truly expansive edited volume full of both classics and more recent work, many of which are directly relevant to the study of labor markets.
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Kalleberg, Arne L., and Aage B. Sørensen. 1979. The sociology of labor markets. Annual Review of Sociology 5:351–379.
DOI: 10.1146/annurev.so.05.080179.002031Save Citation »Export Citation »E-mail Citation »
An excellent and highly readable review of sociological theory and research on labor markets through the late 1970s. Available online by subscription.
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Kerckhoff, Alan C. 1995. Institutional arrangements and stratification processes in industrial societies. Annual Review of Sociology 21:323–347.
DOI: 10.1146/annurev.so.21.080195.001543Save Citation »Export Citation »E-mail Citation »
In this excellent overview of research in the status attainment tradition, Kerckhoff brings in an additional focus on educational institutions. Available online by subscription.
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Smelser, Neil J., and Richard Swedberg, eds. 2005. The handbook of economic sociology. New York: Russell Sage Foundation.
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An excellent introduction to economic sociology that will be useful in understanding sociological perspectives on labor markets. Chapter 12 provides an excellent discussion of the sociology of labor markets. Originally published in 1994.
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Data Sources

There is an abundance of data available for research on the labor market. Many of the datasets used in empirical research on labor markets, such as the Current Population Survey and most data collected at the Bureau of Labor Statistics, are collected at the individual level and as such describe workers and their characteristics. Less common are datasets that link workers to their places of employment or include detailed information about their employment histories. Included here is a small sampling of datasets commonly used in labor market research. Some longitudinal datasets, such as the National Longitudinal Surveys and the Panel Study of Income Dynamics, have the advantage of following the same individuals over time, making them ideal for studying change. Others, such as the Current Population Survey and the General Social Survey, are conducted at regular time intervals but do not include the same respondents. For international data, one should look at the data from the International Social Survey Programme and the LIS Cross-National Data Center. Detailed data describing occupations and their requirements is in the O*NET data, which is underused in labor market research.

Bureau of Labor Statistics.
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A unit of the US Department of Labor, the Bureau of Labor Statistics (BLS) collects, analyzes, and disseminates key statistical information about the US labor force and other economic indicators. The BLS also collects more specialized data of interest to labor market researchers that are described on the BLS website.
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Current Population Survey.
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The Current Population Survey (CPS) is a monthly survey of approximately fifty thousand US households and is one of the primary data sources on the US labor force. Conducted by the US Census Bureau for the Bureau of Labor Statistics, it is the source of the official unemployment rate and provides estimates of other labor force characteristics, including work experience, wages, and work hours. It also includes many demographic indicators, making it ideal for group comparisons.
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General Social Survey.
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A long-standing favorite among social scientists, the General Social Survey (GSS) contains rich data relating to labor market issues. The GSS includes core questions that have been unchanged since 1972, making it well suited for examining trends. Since the mid-1980s the GSS has included a cross-national module that has been developed as a component of the International Social Survey Programme.
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International Social Survey Programme.
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The International Social Survey Programme comprises annual surveys in forty-eight countries from around the world. It began in 1984 with only four countries. Yearly topical modules vary from year to year, but many are of interest to labor market researchers—specifically, the modules on social inequality and work orientations.
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LIS Cross-National Data Center.
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Located in Luxembourg, LIS is a cross-national data center. It houses the Luxembourg Income Study Database and the Luxembourg Wealth Study Database. These important datasets include harmonized individual-level data from high- and middle-income countries around the globe.
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National Longitudinal Surveys.
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The National Longitudinal Surveys (NLS) are conducted by the US Bureau of Labor Statistics. They are designed to collect data on individuals at multiple time points, following individuals and their labor market activities over time. The NLS website provides details on the various surveys, their designs, and other useful information.
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O*NET.
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O*NET has replaced the Dictionary of Occupational Titles, a flawed but often-used dataset on the work requirements of occupational categories. It has become the primary source of data on occupations in the United States, providing a rich data source for those interested in the requisite skills and other characteristics of specific occupations.
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Panel Study of Income Dynamics.
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The Panel Study of Income Dynamics (PSID) is a nationally representative panel study that includes nearly ten thousand families in the United States. The PSID has collected data on the same individuals and families and individuals since 1968, making it a rich source of longitudinal data. It includes highly detailed information on key characteristics of individuals and households. More information on the PSID can be found in an online brochure.
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Journals

Theorizing about labor markets and empirical examination studies can be found both in general and specialty sociology journals. They are also commonly found in leading economics journals. The journals listed in this section all are peer reviewed. The American Sociological Review is the American Sociological Association’s flagship journal and, similar to Social Forces, the European Sociological Review, and the American Journal of Sociology, is a generalist journal. More specialized journals that publish work relevant to the study of labor markets include Social Science Research (a heavily quantitative journal), Work and Occupations, Work, Employment, and Society, and the Journal of Labor Research. Those researchers with special interests in inequality should look at Research in Social Stratification and Mobility.

American Journal of Sociology.
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A highly regarded generalist journal published by the University of Chicago Press.
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American Sociological Review.
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Founded in 1936, the American Sociological Review is the flagship journal of the American Sociological Association.
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European Sociological Review.
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A leading journal published by Oxford University Press, the European Sociological Review publishes cutting-edge empirical research by top scholars from around the world. One can find many articles addressing labor and employment issues in this journal.
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Journal of Labor Research.
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Publishes original research on behaviors that help shape labor market outcomes.
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Research in Social Stratification and Mobility.
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With a specialized focus, Research in Social Stratification and Mobility is the official journal of the International Sociological Association’s Research Committee 28 (on Social Stratification and Mobility (ISA RC28). The ISA RC28 committee holds regular research conferences that draw scholars from around the world.
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Social Forces.
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A general journal housed at the University of North Carolina at Chapel Hill. Social Forces is associated with the Southern Sociological Association and is widely considered a top-tier sociology journal.
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Social Science Research.
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An Elsevier journal, Social Science Research publishes high-quality quantitative research.
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Work, Employment, and Society.
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Leading international journal of the British Sociological Association.
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Work and Occupations.
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A SAGE Publications specialty journal focusing on a broad range of work-related issues. Housed at Vanderbilt University.
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Classic Works

Theorizing about labor markets, the rewards associated with work, and the sources of employment-related inequality in society has a long history. For example, early thinkers, such as Adam Smith (see Smith 1986) in the 18th century, and other classical economists, such as John Stuart Mill and David Ricardo, offered some of the first treatments of how labor markets operate. Mill 1926 and Ricardo 1817 in fact directly address the distribution of wages, and their concepts played a central role in the development of labor economics and greatly influenced the thinking of Karl Marx and Max Weber. Marx (see Marx 1977) of course is well known for outlining the concept of exploitation. Concepts in Weber 1978, such as power and social closure, are also central to thinking about labor markets and related issues. An excellent overview to these classical thinkers is provided in Giddens 1971. In stark contrast to Marx and Weber, Durkheim 1984 posits that as societies become more advanced, changes in the division of labor result in the meritocratic distribution of rewards. Davis and Moore 1945 offers the classic statement of the functionalist view of reward distribution in the labor market.

Davis, Kingsley, and Wilbert E. Moore. 1945. Some principles of stratification. American Sociological Review 10.2 (April): 242–249.
DOI: 10.2307/2085643Save Citation »Export Citation »E-mail Citation »
While early-21st-century readers may find it anachronistic, this is the classic statement of the functionalist view of the attainment of work-related rewards in the labor market. Available online by subscription.
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Durkheim, Émile. 1984. The division of labor in society. Translated by W. D. Halls. New York: Free Press.
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Durkheim was concerned with the transition from “primitive” societies to advanced industrial societies, which is said to have profound implications for the division of labor. The complex division of labor in advanced industrial societies required the meritocratic allocation of people to positions, with rewards distributed based on their merit. Originally published in English in 1933 (New York: Macmillan).
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Giddens, Anthony. 1971. Capitalism and modern social theory: An analysis of the writings of Marx, Durkheim, and Max Weber. Cambridge, UK: Cambridge Univ. Press.
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Giddens provides a thorough and lucidly written summary of the theories of Marx, Weber, and Durkheim. An outstanding introduction to these classical theorists, who occupy a crucial role in the development of thinking about work, employment, and labor markets. This book may be especially useful for graduate students looking for lucid summaries of classical approaches to labor markets.
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Marx, Karl. 1977. Capital: A critique of political economy. Vol. 1, The capitalist process of production. Translated by Ben Fowkes. New York: Vintage.
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First published in German in 1867, here Marx offers his theory about how capitalists gain advantage through the exploitation of labor. Also outlines his theory of surplus value.
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Mill, John Stuart. 1926. Principles of political economy, with some of their applications to social philosophy. Edited by W. J. Ashley. London: Longmans, Green.
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Mill argued for the existence of “noncompeting groups” that regulated the supply of labor to desirable occupations. This in turn accounted for the positive relationship between wages and other job rewards.
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Ricardo, David. 1817. On the principles of political economy and taxation. London: John Murray.
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Ricardo was a highly important and influential thinker who developed key theories about wages and profits under certain economic conditions. As is true of many of the concepts developed by Ricardo, his notion of economic rent continues to be important. Republished in 1973 as Principles of Political Economy and Taxation (New York: Dutton).
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Smith, Adam. 1986. The wealth of nations: Books I–III. Penguin Classics. New York: Penguin.
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Originally published in 1776. Smith was among the first to think about supply and demand as forces that determine rewards in the labor market. He is also credited with the idea of “compensating differentials” in labor markets, which purports to explain why wages for undesirable work should be higher.
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Weber, Max. 1978. Economy and society: An outline of interpretive sociology. 2 vols. Edited by Guenther Roth and Claus Wittich. Berkeley: Univ. of California Press.
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Like Marx, Weber emphasized the role of power rather than merit (as did Durkheim and other functionalists) in determining who gets what position. Among many other reasons, Weber’s work is critical for introducing the notion of social closure, which posits that powerful people are able to monopolize access to highly rewarded positions in society. This is a key concept for scholars on inequality.
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Theoretical Perspectives

This section’s readings represent some of the dominant theoretical approaches to the study of labor markets. Human capital models represent a major neoclassical account for how labor markets operate—they focus on individuals’ investments in skills, education, and training that are said to boost productivity and therefore wages. The Neoclassical and Human Capital Models section offers critiques of human capital models and associated assumptions, presenting readings on “structural” accounts of labor markets. These accounts, as the readings demonstrate, stand in stark contrast to “supply side” theories, such as human capital. The readings then turn to efficiency wage theories, which highlight employers’ incentives to pay workers more than what supply-and-demand factors would suggest. Thus efficiency wage theories provide a different way of accounting for the positive relationship between wages and productivity. In turn the readings on the role of social capital in the labor market highlight the assets one gains from one’s social networks and how they enhance our understanding of how labor markets work. For example, this research focuses on one’s social relations and how they help (or fail to help) one find a job or advance in one’s workplace. The final section addresses varying conceptions of the role of Education and the Labor Market and deals with the question of whether education increases one’s skills or whether there is another explanation for why education is positively related to wages.

Neoclassical and Human Capital Models

Put in the simplest terms possible, neoclassical labor market theory posits that an individual’s income is determined by his or her productivity. One type of neoclassical model that has been especially dominant is the human capital model. This model views workers in the labor market as rational actors who made decisions about their investment in “human capital,” such as education, training, and skills. These human capital investments are then “cashed in” in the labor market, since they signal productivity to employers, who are willing to pay for them. Neoclassical models, including human capital theory, are considered “supply side” theories in that the focus is on the worker side. Group inequalities are assumed to be reducible to differences in the investments groups make in human capital. Human capital theorists, as seen in Becker 1994, have also theorized about the relationship between the family and the labor market. There it is argued that decisions couples make about how and in what proportions to share household labor, for example, are often rational, given the assumed goal of utility maximization at the household level. Additionally, a human capital approach has been used to explain sex segregation in the labor market. In the human capital account, women choose employment in female-dominated occupations, because those occupations require skills that erode more slowly, thereby reducing the penalty associated with women’s intermittent labor force participation. Of course there is much more to this theory than can be adequately captured in a short summary. Becker 1994 is a good place to start one’s reading on this topic, because it is widely considered the most seminal and influential source. Mincer 1974, Schultz 1971, and Polachek and Siebert 1993 are also key contributions to human capital models, addressing a wider range of topics. Importantly, Cain 1976, in the author’s classic critique, addresses segmented labor market theories and the challenge they pose to orthodox theory. Both Tam 1997 and Polachek 1981 apply human capital models to gender inequality, thus providing a lucid discussion of relevant theory.

Becker, Gary S. 1994. Human capital: A theoretical and empirical analysis, with special reference to education. 3d ed. Chicago: Univ. of Chicago Press.
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The Nobel laureate Gary Becker lays out his argument about human capital investment and its function in determining wages. He develops a model of how particular investments should be made, given costs and benefits. The first edition of Human Capital was published in 1964 (New York: National Bureau of Economic Research).
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Cain, Glen G. 1976. The challenge of segmented labor market theories to orthodox theory: A survey. Journal of Economic Literature 14.4 (December): 1215–1257.
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In this seminal piece Cain summarizes the new (at the time) segmented labor market theories. It might appear that Cain is critical of the neoclassical views and will come down on the side of the segmented labor market theories, but he does not. Available online by subscription.
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Mincer, Jacob. 1974. Schooling, experience, and earnings. Human Behavior and Social Institutions 2. New York: Columbia Univ. Press.
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In this seminal contribution to human capital theory and to labor economics in general, Mincer analyzed data from the 1950 and 1960 US censuses to explicate the relationship between education and other supply-side factors and income.
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Polachek, Solomon W. 1981. Occupational self-selection: A human capital approach to sex differences in occupational structure. Review of Economics and Statistics 63.1 (February): 60–69.
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A seminal article applying the human capital approach to a key labor market outcome—the sex segregation of occupations. This should be read in conjunction with Paula England’s critique and test of the human capital account of sex segregation (see England 1982, cited under Labor Market Inequality by Gender and Race). Available online by subscription.
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Polachek, Solomon W., and W. Stanley Siebert.1993. The economics of earnings. Cambridge, UK: Cambridge Univ. Press.
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A classic exposition of neoclassical earnings models with careful attention to life cycle effects. Offers wide coverage of many key concepts and issues, including discrimination, the role of labor unions, the wage effects of schooling, and gender in the labor market.
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Schultz, Theodore W. 1971. Investment in human capital: The role of education and of research. New York: Free Press.
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A human capital theorist who won the Nobel Prize, Schultz offers a more expansive set of types of human capital in which one may choose to invest.
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Tam, Tony. 1997. Sex segregation and occupational gender inequality in the United States: Devaluation or specialized training? American Journal of Sociology 102.6 (May): 1652–1692.
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Tam tests whether a variant of human capital theory, which stresses the importance of specialized human capital, explains why female-dominated occupations pay less than male-dominated occupations. This explanation is tested against the devaluation hypothesis, which posits that low pay in female-dominated occupations can be explained by a cultural bias against work done by women. Available online by subscription.
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Structural Theories, Labor Market Segmentation, and Critiques of Human Capital Theory

“Structural” approaches to the labor market stand in stark contrast to neoclassical models that emphasize a single, homogeneous labor market. For example, in opposition to neoclassical wage models emphasizing productivity, segmented labor market theory argues that institutional structures and features determine wage rates and job opportunity rather than workers’ marginal productivity. The most basic approach is dual labor market theory, which divides the labor force into primary and secondary labor market sectors. The primary labor market is characterized by higher wages and longer tenure at a firm, while the secondary labor market is typified by workers’ poor tenure and slim chance of promotion. Most basically, the idea of “structure” implies that one should focus on positions in society, not solely on the attributes of individual workers. Beck, et al. 1978 offers a classic statement of the dual labor market approach, while Hodson and Kaufman 1982 is an extremely useful introduction. Edwards 1979 also draws heavily from a segmented labor market approach in a classic study of workplace control. Comparisons with other approaches (such as human capital theory) and relevant critiques are provided in Bibb and Form 1977, Smith 1990, Gordon 1972, and Granovetter 1981. Baron and Bielby 1980 cogently argues that firms and organizations are really where the action is and failure to attend to organizational processes renders the idea of “structure” less useful than it could be.

Baron, James N., and William T. Bielby. 1980. Bringing the firms back in: Stratification, segmentation, and the organization of work. American Sociological Review 45.5 (October): 737–765.
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Classic article admonishing researchers to focus on firm- and establishment-level processes that help determine patterns of inequality and the distribution of rewards. Available online by subscription.
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Beck, E. M., Patrick M. Horan, and Charles M. Tolbert II. 1978. Stratification in a dual economy: A sectoral model of earnings determination. American Sociological Review 43.5 (October): 704–720.
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An important, oft-cited article that analyzes the importance of core and periphery industrial sectors on earnings determination. Good overview of relevant theories. Available online by subscription.
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Bibb, Robert, and William H. Form. 1977. The effects of industrial, occupational, and sex stratification on wages in blue-collar markets. Social Forces 55.4 (June): 974–996.
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Compares the effects of human capital and structural variables on earnings. The authors find that the effects of structural variables are much stronger.
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Edwards, Richard C. 1979. Contested terrain: The transformation of the workplace in the twentieth century. New York: Basic Books.
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Drawing heavily on labor market segmentation theory, Edwards explores how variation in market conditions yields different types of control.
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Gordon, David M. 1972. Theories of poverty and underemployment: Orthodox, radical, and dual labor market perspectives. Lexington, MA: Lexington Books.
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In considering poverty and underemployment, this book provides critical comparisons and useful summaries of orthodox economic theory, dual labor market theory, and radical economic theory.
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Granovetter, Mark. Toward a sociological theory of income differences. In Sociological perspectives on labor markets. Edited by Ivar E. Berg, 11–47. Quantitative Studies in Social Relations. New York: Academic Press, 1981.
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Granovetter provides a rich, convincing critique of human capital theory and neoclassical theories of wage attainment in labor markets. He also critically evaluates structural views before turning to his vision of the job-matching process.
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Hodson, Randy, and Robert L. Kaufman. 1982. Economic dualism: A critical review. American Sociological Review 47.6 (December): 727–739.
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Hodson and Kaufman provide a critical assessment of the dual economy approach to labor market segmentation. A great starting point for those interested in the dual economy approach to labor market structure. Available online by subscription.
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Smith, Michael R. 1990. What is new in “new structuralist” analyses of earnings? American Sociological Review 55.6 (December): 827–841.
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Smith offers a highly critical view of sociologists’ critique of neoclassical theory. He lays out several reasons why he finds these critiques inadequate and unconvincing. Available online by subscription.
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Efficiency Wage Models

Efficiency wage theories provide a way to account for the positive relationship between wages and productivity by asserting that the productivity of workers in firms is positively correlated with the wages they receive. Efficiency wage models point to employers’ incentives to pay workers more than an employer would by relying only on supply and demand. The logic of efficiency wage models can also be used to explain the existence of dual labor markets. Put simply, dual labor markets can be the result if the wage-productivity relationship is stronger in some economic sectors than in others. There are several variants, or submodels, of efficiency wage theories. Two dominant variants are the shirking model and the gift exchange model. Shirking models assert that the likelihood that an employee shirks (does minimal work) decreases with his or her wage, since a higher wage makes losing one’s job more costly. The gift exchange model (see Akerlof and Yellen 1986) posits that workers respond to higher wages by exerting more effort at their jobs. Other variants can be found in the literature on efficiency wages. One should begin one’s reading on this topic with Akerlof and Yellen 1986, which clearly presents the central assumptions and hypotheses derived from various efficiency wage models. Yellen 1984 provides an accessible introduction to four key efficiency wage models as applied to unemployment. Weiss 1990 is a well-known book that also targets unemployment. Cappelli and Chauvin 1991 conducts an empirical test of one important efficiency wage model, demonstrating the application of real data to predictions derived from this approach.

Akerlof, George A., and Janet L. Yellen, eds. 1986. Efficiency wage models of the labor market. Cambridge, UK: Cambridge Univ. Press.
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This is an important edited volume for anyone interested in efficiency wage theory. The introduction is particularly useful, because it lays out the key hypotheses and assumptions of various approaches.
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Cappelli, Peter, and Kevin Chauvin. 1991. An interplant test of the efficiency wage hypothesis. Quarterly Journal of Economics 106.3 (August): 769–787.
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Cappelli and Chauvin provide an empirical test of the shirking model using plant-level data. Their results are for the most part consistent with the shirking model. Available online for purchase or by subscription.
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Weiss, Andrew. 1990. Efficiency wages: Models of unemployment, layoffs, and wage dispersion. Princeton, NJ: Princeton Univ. Press.
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Weiss, a leading scholar on efficiency wages, shows how efficiency wages can be used to explain unemployment and interindustry wage differentials.
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Yellen, Janet L. 1984. Efficiency wage models of unemployment. American Economic Review 74.2 (May): 200–205.
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A short, tightly written outline of the microfoundations of efficiency wage theory, including four dominant efficiency wage models. Available online by subscription.
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The Role of Social Capital

Some important sociological work on the labor market points to the importance of social capital—assets gained from one’s social relations—for understanding labor market processes and outcomes. This lies in stark contrast to other labor market models, such as the human capital model in economics and the status attainment tradition in sociology, that focus on individual characteristics, such as investment in education, to explain labor market outcomes. Social capital, is it argued, is often gleaned directly from one’s social networks. This has led to a vibrant stream of research that explores the link between one’s social networks and various labor market processes, such as finding a job. Excellent overviews are in Granovetter 2005; Lin 1999; and Lin, et al. 2008. Key empirical studies on the operation of networks are in Fernandez, et al. 2000; Granovetter 1973; and Granovetter 1995, while the findings presented in Mouw 2003 lead one to question the causal effect of the social capital arising from one’s networks. Similarly, Bian 1997 offers an oft-cited challenge to the “weak ties” theory in Granovetter 1973. Yakubovich 2005 examines the operation of networks in a Russian city in another test of Mark S. Granovetter’s influential hypothesis.

Bian, Yanjie. 1997. Bringing strong ties back in: Indirect ties, network bridges, and job searches in China. American Sociological Review 62.3 (June): 366–385.
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This influential article examines and offers a challenge to Granovetter’s “weak ties” theory by showing the importance of strong ties for finding a job. Available online by subscription.
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Fernandez, Roberto M., Emilio J. Castilla, and Paul Moore. 2000. Social capital at work: Networks and employment at a phone center. American Journal of Sociology 105.5 (March): 1288–1356.
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Although much of the research on social networks and labor market outcomes focuses on the job-seeker side of the equation, this important work examines the role of social networks from the employer’s side of the labor market. This case study sheds new light on a relatively unexplored aspect of the worker-employee matching process. Available online by subscription.
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Granovetter, Mark S. 1973. The strength of weak ties. American Journal of Sociology 78.6 (May): 1360–1380.
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In this highly influential article Granovetter puts forth his “weak ties” argument that it is the weak ties (acquaintances) in one’s social network that are the most beneficial contacts. Available online by subscription.
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Granovetter, Mark S. 1995. Getting a job: A study of contacts and careers. 2d ed. Chicago: Univ. of Chicago Press.
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This classic study of how women and men find their jobs demonstrates how labor market processes are dependent on social activities. As such, Granovetter’s findings have profound implications for theories of labor markets and economic behavior.
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Granovetter, Mark. 2005. The impact of social structure on economic outcomes. Journal of Economic Perspectives 19.1 (Winter): 33–50.
DOI: 10.1257/0895330053147958Save Citation »Export Citation »E-mail Citation »
In this excellent overview Granovetter shows how social structure—in the form of one’s social networks—affects economic outcomes. An excellent article for those interested in the study of labor markets and economic behavior more generally. Available online by subscription.
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Lin, Nan. 1999. Social networks and status attainment. Annual Review of Sociology 25:467–487.
DOI: 10.1146/annurev.soc.25.1.467Save Citation »Export Citation »E-mail Citation »
This informative review traces the development of research on how access to and mobilization of social capital improves one’s odds of attaining higher statuses. The review offers a lucid discussion of critical issues and directions for future research (as the 20th century ended). Available online by subscription.
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Lin, Nan, Karen S. Cook, and Ronald S. Burt, eds. 2008. Social capital: Theory and research. New Brunswick, NJ: Aldine Transaction.
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An important and accessible introduction to research on social capital. Excellent overview of the role social networks play in the labor market.
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Mouw, Ted. 2003. Social capital and finding a job: Do contacts matter? American Sociological Review 68.6 (December): 868–898.
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Mouw tests whether the social capital that comes from one’s social contacts actually helps people find jobs. Instead of finding a causal effect of social capital, as predicted and found in much of the literature, it turns out that similar people are more likely to be friends. This calls into question the causal effect of the social capital gleaned from one’s friendship network. Available online by subscription.
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Yakubovich, Valery. 2005. Weak ties, information, and influence: How workers find jobs in a local Russian labor market. American Sociological Review 70.3 (June): 408–421.
DOI: 10.1177/000312240507000303Save Citation »Export Citation »E-mail Citation »
A provocative test of Granovetter’s theory of the strength of weak ties using data from a Russian city. Available online for purchase or by subscription.
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Education and the Labor Market

What role does education play in the labor market? How do we explain the relationship between educational attainment and wages? Not surprisingly, different theoretical approaches take widely divergent positions about what the educational system actually does and the underlying processes that link education to wages. Excellent introductions are in Bills 2004 and Breen and Jonsson 2005. One key debate about the role of education hinges on whether the educational system actually imparts skills and technological knowledge that employers are willing to pay for (in the form of higher wages) in the labor market or whether the system of higher education merely provides credentials that are used by some to protect their advantaged position. This latter position is exemplified by the work in Berg 2003, Bowles and Gintis 1976, and Collins 1979. Relatedly, Brown 2001 provides a useful introduction to Max Weber’s notion of credentialism. The classic Jencks 1972 also calls into question the link between schooling and labor market outcomes, and Stolzenberg 1978 brings the employment context into the debate by asking whether returns to schooling vary by the size of the employer.

Berg, Ivar E. 2003. Education and jobs: The great training robbery. Foundations of Sociology. Clinton Corners, NY: Percheron.
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Originally published in 1970 (New York: Praeger). The 2003 edition contains a new introduction by the author. Berg critiques the economic explanation for the relationship between education and job rewards. Similar to Collins 1979, Berg argues that the effect of education is through credentialing, not the transmission of technical skills and knowledge.
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Bills, David B. 2004. The sociology of education and work. Malden, MA: Blackwell.
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An excellent, nontechnical introduction to debates about the relationship between education and labor market outcomes.
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Bowles, Samuel, and Herbert Gintis. 1976. Schooling in capitalist America: Educational reform and the contradictions of economic life. New York: Basic Books.
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A definitive Marxist critique of human capital theory. Bowles and Gintis argue that the main contribution of schooling to individual economic success does not involve the cognitive development associated with schooling. Instead, by structuring rewards to mirror workplaces, schools function to socialize students, making them into compliant workers who are willing to accept the capitalist structure of the economy.
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Breen, Richard, and Jan O. Jonsson. 2005. Inequality of opportunity in comparative perspective: Recent research on educational attainment and social mobility. Annual Review of Sociology 31.1: 223–243.
DOI: 10.1146/annurev.soc.31.041304.122232Save Citation »Export Citation »E-mail Citation »
Provides a useful introduction to theory and research on the effects of education on social mobility. Available online by subscription.
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Brown, David K. 2001. The social sources of educational credentialism: Status cultures, labor markets, and organizations. Sociology of Education 74:19–34.
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An excellent review of Weber’s views on educational credentialism as they relate to more current views on credentialism. Also provides a lucid summary of human capital approaches to the topic. Available online by subscription.
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Collins, Randall. 1979. The credential society: An historical sociology of education and stratification. New York: Academic Press.
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Collins provides a lucid attack on the functionalist argument that schooling provides the skills required for work in a labor market characterized by increasing technological demands. For Collins, educational credentials have little to do with skills and instead provide a means for elites to exclude others from opportunities.
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Jencks, Christopher. 1972. Inequality: A reassessment of the effect of family and schooling in America. New York: Basic Books.
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In a landmark study Jencks demonstrates that the quality of schooling correlates only very weakly with adults’ occupational status and income, raising provocative questions about the link between education and labor market outcomes, on the one hand, and school reform, on the other.
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Stolzenberg, Ross M. December 1978. Bringing the boss back in: Employer size, employee schooling, and socioeconomic achievement. American Sociological Review 43.6: 813–828.
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In addition to providing a useful discussion of human capital theory, this often-cited article shows that economic returns to education depend on the size of the employer. By doing so, it makes a compelling case for bringing firms into the study of labor market processes. Available online by subscription.
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Internal Labor Markets

The dominant conception of internal labor markets (ILMs) portrays them as clusters of jobs in an organization or firm, where workers are hired into entry-level jobs and openings in higher levels are filled internally, that is, with current employees. This is contrasted with the “external labor market,” where decisions about pricing, training, and other factors are controlled directly by market forces. One might begin reading on this topic with the useful review in Althauser 1989 and the well-known Osterman 1984. Doeringer and Piore 1985, a seminal work, is also a good place to start. Other works are more specific in their attempts to account for the origins of ILMs. For example, Dobbin, et al. 1993 draws on organizational theory regarding the role of organizational environments in the adoption of ILM practices. The well-known Pfeffer and Cohen 1984 and Bills 1987 also focus on the key question of ILM adoption and development. Stark 1986 shows how different economic systems and different organizational arrangements influence how ILMs operate.

Althauser, Robert P. 1989. Internal labor markets. Annual Review of Sociology 15:143–161.
DOI: 10.1146/annurev.so.15.080189.001043Save Citation »Export Citation »E-mail Citation »
A thorough, highly readable review of theory and research on the conceptualization of ILMs, their theoretical origins, and key findings of research on ILMs. A good place to begin one’s reading on this important subset of labor market theory and research. Available online by subscription.
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Bills, David B. 1987. Costs, commitment, and rewards: Factors influencing the design and implementation of internal labor markets. Administrative Science Quarterly 32.2 (June): 202–221.
DOI: 10.2307/2393126Save Citation »Export Citation »E-mail Citation »
Bills presents case studies of three organizations that have very different ILMs. Based on these case studies, Bills develops a model of ILM development that hinges on factors that are not usually made explicit in accounting for ILMs. Available online by subscription.
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Dobbin, Frank, John R. Sutton, John W. Meyer, and W. Richard Scott. 1993. Equal opportunity law and the construction of internal labor markets. American Journal of Sociology 99.2 (September): 396–427.
DOI: 10.1086/230269Save Citation »Export Citation »E-mail Citation »
A careful analysis that empirically demonstrates that organizations in the United States often adopt ILM practices based on changes in their environments rather than as a response to internal demands and efficiency imperatives. Available online by subscription.
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Doeringer, Peter B., and Michael J. Piore. 1985. Internal labor markets and manpower analysis. Armonk, NY: Sharpe.
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Originally published in 1971 (Lexington, MA: Heath). Based on interviews with union officials and managers, this important book provides a careful treatment of the origins and structure of internal labor markets. It also focuses on fundamental topics, including wage determination and racial discrimination in internal labor markets, and the impact of technological change.
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Osterman, Paul, ed. 1984. Internal labor markets. Cambridge, MA: MIT Press.
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The contributions to this edited volume provide important insights into the origins and changing importance of internal labor markets. They also engage the development of employment practices that have resulted from the changing landscape of government regulation, union strength, and other factors.
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Pfeffer, Jeffrey, and Yinon Cohen. 1984. Determinants of internal labor markets in organizations. Administrative Science Quarterly 29.4 (December): 550–572.
DOI: 10.2307/2392939Save Citation »Export Citation »E-mail Citation »
The evidence suggests that organizational variables and economic considerations should be incorporated in explanations of the presence of internal labor markets. Available online by subscription.
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Stark, David. 1986. Rethinking internal labor markets: New insights from a comparative perspective. American Sociological Review 51.4 (August): 492–504.
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This important article contrasts the operation of internal labor markets in capitalist versus socialist economies. Internal labor markets provide mechanisms for accomplishing certain organizational goals in both types of economies; however, the specific organizational arrangements and the logics by which internal labor markets operate are different across the two types of economic systems. Available online by subscription.
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Discrimination

Both defining and measuring discrimination have stirred vigorous debate among scholars and those in the public policy arena. Generally, though, one can define discrimination as unequal treatment based on some nonproductivity-related characteristic, such as one’s gender, race, or ethnicity. To the extent that such characteristics influence decisions about hiring, pay, job placement, or other employment-related conditions, one can say there is ascription in the labor market. That is, discrimination can be thought of as differential treatment based on ascriptive characteristics. An excellent introduction to competing theories of discrimination and inequality more generally is in Albelda 2010, et al. Quillian 2006 and Pager and Shepherd 2008 are useful discussions of methods and approaches to measuring discrimination, as is Heckman 1998. Becker 1957 and Phelps 1972 are extremely important classics written by economists and represent the origins of key models of discrimination, including the “taste” and “statistical” models. They also distill dominant economic perspectives on discrimination, which sharply contrast with sociological models. For those interested in public policy, a diverse array of scholars can is in Burstein 1994, which addresses, among other things, the thorny issue of the effects of equal employment opportunity laws on discrimination.

Albelda, Randy P., Robert W. Drago, and Steven Shulman. 2010. Unlevel playing fields: Understanding wage inequality and discrimination. 3d ed. Cambridge, MA: Economics Affairs Bureau.
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The authors, all economists, provide an extremely useful overview of economic theories of discrimination and competing explanations for inequality. A good place to start one’s reading on the economic view of labor market discrimination.
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Becker, Gary S. 1957. The economics of discrimination. Chicago: Univ. of Chicago Press.
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This classic book outlines Becker’s formal theory of discrimination, which addresses discrimination not only by employers but also by customers and other actors. Also central is Becker’s model of “taste” discrimination. Among the more controversial ideas is the notion that racial discrimination cannot exist in the long run, because employers who discriminate would be at a competitive disadvantage relative to those who do not. Second edition published in 1995 (Chicago: Univ. of Chicago Press).
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Burstein, Paul, ed. 1994. Equal employment opportunity: Labor market discrimination and public policy. Sociology and Economics. New York: Aldine de Gruyter.
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An impressive and diverse collection of readings on discrimination uniting economists, sociologists, and other scholars. The chapters address equal employment opportunity laws, their effects, and the struggle to combat discrimination through public policy. James N. Baron’s contribution (chapter 6, “Organizational Evidence of Ascription in Labor Markets”) may be particularly useful.
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Heckman, James J. 1998. Detecting discrimination. Journal of Economic Perspectives 12.2 (Spring): 101–116.
DOI: 10.1257/jep.12.2.101Save Citation »Export Citation »E-mail Citation »
An engaging review of definitions and methods of measuring discrimination. Especially noteworthy is the detailed discussion of the quasi-experimental “audit pair” method used to detect discrimination by race and sex. Available online by subscription.
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Pager, Devah, and Hana Shepherd. 2008. The sociology of discrimination: Racial discrimination in employment, housing, credit, and consumer markets. Annual Review of Sociology 34.1: 181–209.
DOI: 10.1146/annurev.soc.33.040406.131740Save Citation »Export Citation »E-mail Citation »
Pager and Shepherd offer an excellent overview of methods for measuring and detecting discrimination. A highly useful review of the literature. Available online for purchase or by subscription.
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Phelps, Edmund S. 1972. The statistical theory of racism and sexism. American Economic Review 62.4 (September): 659–661.
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The origin of statistical discrimination theory is often traced to this important article. Available online by subscription.
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Quillian, Lincoln. 2006. New approaches to understanding racial prejudice and discrimination. Annual Review of Sociology 32.1: 299–328.
DOI: 10.1146/annurev.soc.32.061604.123132Save Citation »Export Citation »E-mail Citation »
A highly readable and useful examination of the approaches used to measure discrimination and post–civil rights theories of prejudice and the “new racism.” This important review also addresses research on implicit prejudicial attitudes. Available online for purchase or by subscription.
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Key Empirical Studies

What do studies actually say about the existence of discrimination in the labor market? Measuring discrimination is tricky and is the subject of fierce debate. The studies included here represent a sampling of the range of methods used to detect discrimination in the labor market. Some, such as Bielby and Baron 1986, Neumark and McLennan 1995, and Tomaskovic-Devey and Skaggs 1999, use nonexperimental data (employment records or survey data) to statistically test for discrimination. Others, such as Bertrand and Mullainathan 2004, employ the logic of experimental design to conduct a correspondence study in which résumés constructed by the researchers are sent out in response to job openings and group differences in callback rates are taken as evidence of discrimination. The highly readable and engaging Roscigno 2007 provides evidence of discrimination through analyses of unique data taken from actual cases filed with the Ohio Civil Rights Commission. This yields new details into processes that underlie discrimination by gender and race.

Bertrand, Marianne, and Sendhil Mullainathan. 2004. Are Emily and Greg more employable than Lakisha and Jamal? A field experiment on labor market discrimination. American Economic Review 94.4 (September): 991–1013.
DOI: 10.1257/0002828042002561Save Citation »Export Citation »E-mail Citation »
A provocative correspondence study in which the researchers sent out fake résumés to employers. The names on the résumés, which were otherwise equivalent, were manipulated to sound as though they belonged either to white or black applicants. The researchers measured discrimination as the difference in the rate at which each type of résumé generated a callback for a job interview. Available online by subscription.
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Bielby, William T., and James N. Baron. 1986. Men and women at work: Sex segregation and statistical discrimination. American Journal of Sociology 91.4 (January): 759–799.
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A highly influential and often-cited study of job-level sex segregation demonstrating with real data from California employers that employers in fact statistically discriminate. Argues that the pervasiveness of job-level sex segregation is incongruent with predictions from dominant economic explanations. Available online by subscription.
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Neumark, David, and Michele McLennan. 1995. Sex discrimination and women’s labor market outcomes. Journal of Human Resources 30.4 (Autumn): 713–740.
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Tests the human capital account for wage differences. Contrary to human capital theory, the authors find that women who report discrimination are more likely to have subsequent career interruptions. Available online by subscription.
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Roscigno, Vincent J. 2007. The face of discrimination: How race and gender impact work and home lives. Lanham, MD: Rowman and Littlefield.
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Roscigno uses unique data derived from race and gender discrimination cases filed with the Ohio Civil Rights Commission to explore both subtle and overt discrimination in employment and housing. Rife with provocative details, the book provides a rare window into the processes underlying racial and gender discrimination.
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Tomaskovic-Devey, Donald, and Sheryl Skaggs. 1999. An establishment-level test of the statistical discrimination hypothesis. Work and Occupations 26.4 (November): 422–445.
DOI: 10.1177/0730888499026004003Save Citation »Export Citation »E-mail Citation »
Tests predictions from the theory of statistical discrimination with data on productivity and other factors from actual North Carolina work establishments. Also provides a useful explanation of the subtleties that distinguish the economic model of statistical discrimination from its sociological counterpart. Available online for purchase or by subscription.
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Labor Market Inequality by Gender and Race

A sizable portion of labor market research focuses on inequality in outcomes associated with paid employment, which include (but are not limited to) wages and employment rates. A significant share of this work seeks to empirically test hypotheses derived from the various theories outlined in this article. Studying gender and race inequality in labor market outcomes yields findings that are interesting in their own right. For example, the questions of how much inequality between (and within) groups exists and how it may have changed are of fundamental importance to many social scientists. However, answers to these questions are also important because they shed light on the larger theoretical issues and debates regarding the nature and operation of labor markets. One key issue is to what extent there is ascription in labor markets, that is, do ascriptive characteristics, such as race and gender, shape how rewards and opportunities are distributed in the labor market? One should consult Altonji and Blank 1999 and Blau and Kahn 2000 for excellent overviews of various theoretical approaches and summaries of trends. Kaufman 2010 includes very detailed analyses of gender and race inequality but is also notable for its accessible discussion of a wide range of theoretical approaches to inequality. Browne and Misra 2003 discusses the important notion of intersectionality, that race and gender interact to produce unique forms of inequality. Cohen and Huffman 2003 and Cotter, et al. 1997 offer empirical tests that show, among other things, that labor markets are important factors in the study of inequality. Huffman and Cohen 2004 discusses the difference between national and local labor markets and why that distinction is important for understanding gender inequality. In an important article that tests the human capital explanation for occupational segregation by gender, England 1982 finds compelling evidence against that particular supply-side approach.

Altonji, Joseph G., and Rebecca M. Blank. 1999. Race and gender in the labor market. In Handbook of labor economics. Vol. 3C. Edited by Orley C. Ashenfelter and David Card, 3143–3259. Handbooks in Economics 5. Amsterdam and Oxford: Elsevier.
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A cogent, sweeping overview of a large body of research and theory on a variety of important topics related to labor market discrimination.
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Blau, Francine D., and Lawrence M. Kahn. 2000. Gender differences in pay. Journal of Economic Perspectives 14.4 (Autumn): 75–99.
DOI: 10.1257/jep.14.4.75Save Citation »Export Citation »E-mail Citation »
Important overview of trends in earnings inequality up to the turn of the 21st century. Also addresses occupational gender segregation.
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Browne, Irene, and Joya Misra. 2003. The intersection of race and gender in the labor market. Annual Review of Sociology 29:487–513.
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An excellent overview of research on how gender and race intersect to shape patterns of inequality and attainment in the labor market. One of the best introductions to intersectionality in the labor market. Available online by subscription.
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Cohen, Philip N., and Matt L. Huffman. 2003. Individuals, jobs, and labor markets: The devaluation of women’s work. American Sociological Review 68.3 (June): 443–463.
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Empirically examines how the wage penalty associated with female-dominated jobs varies across different kinds of local labor markets. Available online by subscription.
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Cotter, David A., JoAnn DeFiore, Joan M. Hermsen, Brenda Marsteller Kowalewski, and Reeve Vanneman. 1997. All women benefit: The macro-level effect of occupational integration on gender earnings inequality. American Sociological Review 62.5 (October): 714–734.
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Cotter and coauthors demonstrate the importance of local labor market factors—in this case, occupational segregation—in shaping gender inequality in wages. The methods used may be challenging for readers without advanced statistical training, but the exposition and writing are exceptionally clear. Key findings are presented graphically. Available online by subscription.
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England, Paula. 1982. The failure of human capital theory to explain occupational sex segregation. Journal of Human Resources 17.3 (Summer): 358–370.
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England tests and ultimately rejects the human capital explanation for the occupation-based gender division of labor. This explanation for sex segregation in the labor market points to women’s preferences and “rational” choices about the occupations they pursue. Available online by subscription.
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Huffman, Matt L., and Philip N. Cohen. 2004. Occupational segregation and the gender gap in workplace authority: National versus local labor markets. Sociological Forum 19.1: 121–147.
DOI: 10.1023/B:SOFO.0000019650.97510.deSave Citation »Export Citation »E-mail Citation »
This article offers a formal method for determining whether workers in specific occupations are in a national or a local labor market. Then it tests whether patterns of differential access to managerial jobs vary across national and local labor markets. Available online for purchase or by subscription.
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Kaufman, Robert L. 2010. Race, gender, and the labor market: Inequalities at work. Boulder, CO: Lynne Rienner.
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An extremely careful and detailed exploration of inequality by race and gender in the contemporary labor market. Provides an excellent overview of theories that purport to explain inequality in key labor market outcomes.