The Challenge of Dual and Radical Theories of the Labor Market to Orthodox Theory
Abstract
Ideally, a paper that attempts to evaluate a challenge to established theory should accomplish the following objectives: 1. Present the theoretical substance of the challenging theory, which is here called the dual and radical theories, and indicate how it differs from the existing theory, which I will refer to as neoclassical or orthodox theory; 2. Point out the empirical implications of the theories and explain their differences with the existing theory; 3. Assess the empirical basis for discriminating between the competing hypotheses or, if this is lacking, provide the theoretical or evidential counterarguments of the neoclassical response to the dual and radical challenge; and, finally, 4. Spell out the policy implications of the competing theories. Meeting these objectives is an impossible task for a short paper. The space constraint is compounded by the fact that in my judgment the dual and radical theories are too varied, incomplete, and amorphous to present concisely. The strategy I adopt to describe these theories in the longer paper consists of, first, discussing their linkages to historical criticisms of classical and neoclassical theory; second, developing their empirical challenges to orthodox theory. Only the second part is emphasized below. To establish the context of the challenge, let us begin with the observation of Leo Rogin (p. 13) that: new systems (of economic doctrines) first emerge in the guise of arguments in the context of social reform. The dual and radical (or D-R, for short) theories began to emerge in the 1960's when the movement for social reform mainly involved the war on poverty and the drive for full participation in the economy by minority groups, including women. Dissatisfaction with the pace and progress of reform in these areas and dissatisfaction with the conventional analysis of the problems and their remedies have led to arguments within the economics profession, especially on the part of the younger labor economists. Let me simply assert, without defending the proposition as I do in the longer paper, that the neoclassical school does dominate * Department of economics and Institute for Research on Poverty, University of Wisconsin. This is an abbreviated version of a longer paper, which is available from the Institute for Research on Poverty, University of Wisconsin, Madison, Wisconsin 53706. The longer version contains a bibliography, which is omitted here. I am indebted to a number of people at the U.S. Department of Labor, especially Fred Siskind, and at the Institute for Research on Poverty for their support. They are not responsible for errors, nor do they necessarily agree with the interpretations expressed in the report. I am grateful to Marc P. Freiman for his extensive assistance.
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