Labour Market and Dual Structure

Abstract

This chapter analyzes the changes in the labour market that have accompanied economic growth. In Section 9.1 we discuss industrialization—the rise in the importance of ‘industry’ in the national economy—a phenomenon that caused employment to shift from primary to non-primary industries. In Section 9.2 we examine this migration of labour from primary to non-primary industries, the main cause of the absolute and relative growth of the industrial labour force. If the supply of labour is greater than demand the difference must become either unemployed or surplus labour. Japan absorbed a large pool of surplus labour as a result of high economic growth in the postwar period. We analyze this process in Section 9.3. Wages and income shares are determined by demand and supply. Historical statistics related to these variables are presented in Section 9.4 and dual structure theory, especially in relation to inter-industry and inter-firm wage differentials, is discussed.