Niche competition in the occupational labor market: An ecological theory of labor market dynamics

Abstract

This dissertation models occupational wage using a fusion of the economic model of supply and demand and an ecological theory of social groups. I argue that competition between different occupations for similar workers is a key element in determining the amount of labor supplied to occupations, and therefore also determines wages. The model places occupational groups in niches within a social space composed of the sociodemographic dimensions of age, education, race, and gender. Occupations compete in their niches for members with other occupations in the niche. High levels of competition lead to lower levels of supply, and, therefore, higher wages. This approach challenges a key assumption of current approaches to wage determination, namely that human capital dimensions are the only dimensions relevant to wage outcomes, and that the effect of these dimensions is constant and unidirectional. I address several lacuna evident in previous work. The model I present is the first truly structural model of occupational interdependence. The model treats the set of occupations holistically, as a interdependent system, rather than independently. In addition, I introduce price into the theory of community ecology, which has been heretofore ignored in this work. Finally, this dissertation presents a theory which may explain the so called dual labor market wage effect. Data is taken from nine consecutive years of the Current Population Survey (1983-1991). I estimate the rate of change of supply and demand in the occupational labor market using a simultaneous equations model which incorporates the effect of competition along multiple social dimensions. I estimate both unidimensional effects of competition along age and education and multidimensional effects of competition along age, education, race, and gender simultaneously.