Characterizing The Class Organization Of Labor Market Opportunity

Abstract

An underlying mechanism which divides the American labor force into classes is characterized by latent structure methods. Four dichotomous indicators of labor market rewards-measures of the forms of underemployment—are used to infer both the class structure (e.g., the number of classes) and the labor market opportunity characteristic to each class. Several models are developed which demonstrate the plausibility of a dualistic class structure. A "latent marginal class" consisting of 20% to 25% of the labor force is shown to have a very high risk to underemployment, while a complementary "latent nonmarginal class" is shown to have very low risk to underemployment. The across-time change m observed underemployment is decomposed into parts, due to the contribution from each latent labor force class.