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Dualism and the determinants of upward intersegmental mobility in Malaysia
385
Economics Letters 7 (1981) 385-390 North-Holland Publishing Company
DUALISM AND THE DETERMINANTS OF UPWARD INTERSEGMENTAL MOBILITY IN MALAYSIA * Kiong-Hock
Received
LEE
13 April
1981
Dualists emphasize the rigidity of the segmentation of the labour market. This paper examines the extent, and the determinants of upward intersegmental mobility (UIM) in Malaysia. There appears to be considerable UIM, and education and training are highly significant determinants of UIM. The case for a rigid segmentation of the labour market appears weak.
1. Introduction Dual labour market theorists emphasize the rigidity of the segmentation of the labour market into a primary and a secondary segment. ’ This paper serves a twofold purpose. Firstly, to examine the extent of upward intersegmental mobility (UIM) and, more importantly, the determinants of UIM in Malaysia. Emphasis is placed on education and training which are seen by the Government as key catalysts in job mobility. 2 2. The data The sample here is best considered a sub-sample of 212 respondents aged 15 to 40 years taken from a survey of 1179 private sector employees conducted in 1978. 3 For reasons of sampling methodology and the truncation of the total sample, the results here are very tentative. 4 * This’ paper is a modified extract from chapter 9 of my Ph.D. thesis; see Lee (1980). ’ See for instance: (a) Reich, Gordon and Edwards (1973), and (b) Doeringer and Piore (1971). ’ See Federation of Malaysia (1976, p. 96). 3 For details see Lee (1980, app. I). 4 It would be interesting to examine the case of those who experienced downward intersegmental mobility. Unfortunately this particular sample consists only of a handful of such cases.
01651765/81/0000-0000/$02.75
0 1981 North-Holland
386
K.-H. Lee / Dualism and the determinants
of UIM in Mulaysiu
3. The extent of UIM The median of the Trieman Occupational Prestige Scale for Malaysia (25 points) is used as the truncation criterion. 5 The sample shows, on this basis, a considerable amount of UIM. One-half of these respondents who began their first full-time employment in the ‘secondary segment’ experienced UIM. This accords well with the findings of a study of manufacturing sector employees which reports a high (58 percent) incidence of UIM. 6 This does not, however, confirm or refute labour market duality since specification of the extent of UIM is rather arbitrary.
4. The determinants of UIM Consider instead the determinants of the probability of UIM; on the assumption that the classification is meaningful. The median of the occupational prestige scale again serves as the truncation criterion. The structural equation estimated is of the form UPMOB=f(S,N,P,M,B), where the dependent variable, UPMOB, is a dichotomous variable equal to 1 if the individual experiences UIM and 0 if he does not. The complete list of independent variables is given in table 1. Table 2 reports the maximum likelihood estimates for the independent variables, the t-ratios, and the marginal effects. Dual labour market analysts, taking the position that racial differences in labour market access are the effects of large and systematic differentials in returns to equivalent investments in human capital, will no doubt point to the positive and significant (at the 5 percent level) maximum likelihood estimate for the dummy variable ‘Chinese’. Being Chinese, ceteris paribus, increases the propensity of UIM by 37.0 percentage points compared with being Malay or Indian. This seems to lend support to Mehmet’s (1972) arguments of a segmentation of the Malaysian labour market along ethnic lines which favours the Chinese in the private sector. What appears surprising is the negative and significant coefficient for the dummy variable ‘MALE’. Dual labour market theorists have sug5 See Trieman ( 1977). ’ See Gan and Soon (1977, p. 155).
K. -H. Lee / Dualism and the determinants
Table I List of independent (I) Personal
( P)
variables
(3) Status of school of school
(III) Empiqvment
characteristics
( N)
FT=if PFT=
training
(3) Union membership (4) Changed sector of employment (5) Job quits (6) Ownership
of firm
(7) Experience (IV) Motroational
1
UNION = I CHSECTOR
( V) Fami!v background
= 1 if the respondent
has changed his sector of employment QUITS=number of past employers since first full-time employment FORFIRM= 1 if firm is foreign owned or controlled t=years of actual full-time work experience
MARRIED=
1 if respondent is married NODEP=number of people financially dependent upon the respondent
(B
) MED=years
education
(2) Mother’s occupation (3) Father’s education (4) (5) (6) (7)
respondent was given some form of formal training by the present firm if respondent received some form of formal training from past employer(s) if union member
uarrahles ( M)
(I) Marital status (2) Number of dependents
(1) Mother’s
s, = I S”, = 1 s, = I s, = I s, = I s, = 1
S=years of education including postschooling education if English medium if Malay medium if government school if government-aided school if located in the city or municipality if located in a state or district capital
training
(2) Past formal
is of the male sex is Chinese
1
(S)
of instruction
(4) Location
if respondent if respondent
CHINESE=
education
(2) Language
(1) Formal
I
MALE=
(1) Sex (2) Race
(I) Formal
387
variables.
characteristics
(II) Education
of UIM in Malaysia
Father’s occupation Sibling position Family size Childhood environment
SIB=
CE,=l CE,=l
I
of formal education of the respondent’s mother MOC=occupational prestige score FED=years of formal education of the respondent’s father FOC=occupational prestige score if first or last born child FA M= number of children in the family if in the city or municipality if state of district capital
388
K.-H. Lee / Dualism and the determinants
of UIM in Malaysia
Table 2 Maximum likelihood estimates of the determinants of upward function has a significant maximum likelihood ratio statistic). Independent variable
Coefficient (f-ratio)
Constant
- 1.129
MALE
-2.377 a (3.370)
- 0.594
1.480 b (2.360) 0.214 =
CHINESE
s
Marginal effect
Independent variable (continued)
intersegmental
mobility
Coefficient (t-ratio)
Marginal effect
UNION
1.421 b (2.320)
0.356
CHSECTOR
0.918’ (1.750)
0.229
0.370
QUITS
0.602 = (2.800)
0.151
0.054
FORFIRM
-0.050 (0.524)
-0.013
-0.228 (0.384)
-0.057
(1.900) S,
0.227 (0.227)
0.059
MARRIED
Sm
0.028 (0.028)
0.007
NODEP
0.114 (I ,056)
0.029
MED
0.079 (0.955)
0.020
-0.123 (0.190)
-0.031
S,
1.072 (1.290)
0.268
MOC
-0.808 (1.650)
- 0.022
S,
2.157 = (1.710)
0.539
FED
0.114 (0.626)
0.028
S,
1.824’ (1.770)
0.456
FOC
-0.015 (0.704)
- 0.004
1
0.110 (0.808)
0.027
SIB
- 0.446 (0.83 1)
-0.112
- 0.003 (0.637)
-0.001
FAM
0.119 (1.300) - 1.946 (1.590)
FT
2.293 a (3.950)
0.573
CE,
PFT
0.065 (0.081)
0.016
CE,
Number
of cases 2 11
a Significant b Significant ’ Significant
at the 0.01 level. at the 0.05 level. at the 0.10 level.
-0.696 (-0.739)
0.030
-0.486
-0.174
(the
389
K.-H. Lee / Dualism and the determinants of UIM in Malaysia
gested that prior to marriage men are more likely to exhibit the ‘streetcorner’ lifestyle which makes ‘secondary segment’ employment compatible with their modest needs.’ An alternative explanation is that males tend to begin their careers in the lower rungs of the occupational ladder, which offer less scope for upward mobility, than females. a However, the more important point here relates to education and training. The length of formal education has a positive and significant effect on UIM. The quality of education in terms of the location of the school also has a significant impact on UIM. Having one’s schooling in the city (S,.), or in a state or district capital (S,) raises the probability of UIM by 53.9 and 45.6 percentage points, respectively. 9 In relation to employment characteristics, the length of full-time work experience produces no significant result. However, formal training provided by the present firm (FT) greatly enhances the chances for UIM; by 57.3 percentage points-the largest positive marginal effect. Job instability (QUITS) and a change in the sector of employment (CHSECTOR) also produce positive and significant results. The former increases the probability of UIM rather than contributing towards immobility as might be expected under dual labour market theory. The significance of these variables accord better with human capital theory than with dual labour market theory. None of the other variables produce any significant result except for union membership which raises the probability of UIM by 35.6 percentage points. This accords well with general expectations of the role of trade unions.
5. Concluding remarks Two limitations of the analysis should be noted here. First, while schooling, personal characteristics, and family background variables are less subject to change, the employment variables including work experience are subject to changes over time. Where the latter are concerned the appropriate values should cover only up to the period at which UIM occurs. Unfortunately, the present data set does not permit such a fine ’ Doeringer and Piore (197 1, p. 180). * See Mazumdar (1975, p. 10). 9 In Malaysia, urban schools are far better Ministry of Education (1974).
staffed
and equipped
than rural
schools;
see
390
K.-H. Lee / Dualism and the determinants of UIM in Malaysia
distinction to be made. Second, the entire analysis rests on the truncation criterion used; a change in the criterion would no doubt affect the results. From the above, there appears to be considerable room for UIM in Malaysia. Education and training, together with ‘job search’ (defined in terms of ‘QUITS’ and ‘CHSECTOR’), appear to be highly important determinants of UIM. The findings accord better with human capital theory which forms the implicit assumption of the Government’s approach to upward socioeconomic mobility. The case for labour market dualism appears weak though the significance of race as a determinant of UIM lends support to arguments of a segmentation of the labour market which favours the Chinese vis-ri-vis Malays and Indians.
References Doeringer, P.B. and M. Piore. 1971, Internal labour market and manpower analysis (Heath and Co.. Lexington, DC). Federation of Malaysia, 1976. Third Malaysia plan, 1976680 (Government Printer, Kuala Lumpur). Gan. W.B. and L.Y. Soon, 1977. Earnings, human capital and labour market segmentation: A case study of employees in the manufacturing sector, Joint Economic Research Program, no. 5 (Institute of Developing Economies, Tokyo). Lee, K.H., 1980. Education, earnings, and occupational status in Malaysia, 1978. Unpublished Ph.D. thesis (University of London, London). Mazumdar. D., 1975, Education and urban unemployment in Malaysia, Preliminary draft (I.B.R.D., Washington, DC). Mehmet. 0.. 1972, Manpower planning and labour markets in developing countries: A case study of West Malaysia, Journal of Development Studies 8, no. 2. Ministry of Education, 1974, Journal of the Educational Planning and Research Division (Dewan Bahasa dan Pustaka, Kuala Lumpur). Reich, M., D.M. Gordon and R.C. Edwards, 1973. Theory of labour market segmentation, American Economic Review 63, no. 2. Trieman, D.J., 1977. Occupational prestige in comparative perspective (Academic Press, New Yorkj.
Economics Letters 7 (1981) 385-390 North-Holland Publishing Company
DUALISM AND THE DETERMINANTS OF UPWARD INTERSEGMENTAL MOBILITY IN MALAYSIA * Kiong-Hock
Received
LEE
13 April
1981
Dualists emphasize the rigidity of the segmentation of the labour market. This paper examines the extent, and the determinants of upward intersegmental mobility (UIM) in Malaysia. There appears to be considerable UIM, and education and training are highly significant determinants of UIM. The case for a rigid segmentation of the labour market appears weak.
1. Introduction Dual labour market theorists emphasize the rigidity of the segmentation of the labour market into a primary and a secondary segment. ’ This paper serves a twofold purpose. Firstly, to examine the extent of upward intersegmental mobility (UIM) and, more importantly, the determinants of UIM in Malaysia. Emphasis is placed on education and training which are seen by the Government as key catalysts in job mobility. 2 2. The data The sample here is best considered a sub-sample of 212 respondents aged 15 to 40 years taken from a survey of 1179 private sector employees conducted in 1978. 3 For reasons of sampling methodology and the truncation of the total sample, the results here are very tentative. 4 * This’ paper is a modified extract from chapter 9 of my Ph.D. thesis; see Lee (1980). ’ See for instance: (a) Reich, Gordon and Edwards (1973), and (b) Doeringer and Piore (1971). ’ See Federation of Malaysia (1976, p. 96). 3 For details see Lee (1980, app. I). 4 It would be interesting to examine the case of those who experienced downward intersegmental mobility. Unfortunately this particular sample consists only of a handful of such cases.
01651765/81/0000-0000/$02.75
0 1981 North-Holland
386
K.-H. Lee / Dualism and the determinants
of UIM in Mulaysiu
3. The extent of UIM The median of the Trieman Occupational Prestige Scale for Malaysia (25 points) is used as the truncation criterion. 5 The sample shows, on this basis, a considerable amount of UIM. One-half of these respondents who began their first full-time employment in the ‘secondary segment’ experienced UIM. This accords well with the findings of a study of manufacturing sector employees which reports a high (58 percent) incidence of UIM. 6 This does not, however, confirm or refute labour market duality since specification of the extent of UIM is rather arbitrary.
4. The determinants of UIM Consider instead the determinants of the probability of UIM; on the assumption that the classification is meaningful. The median of the occupational prestige scale again serves as the truncation criterion. The structural equation estimated is of the form UPMOB=f(S,N,P,M,B), where the dependent variable, UPMOB, is a dichotomous variable equal to 1 if the individual experiences UIM and 0 if he does not. The complete list of independent variables is given in table 1. Table 2 reports the maximum likelihood estimates for the independent variables, the t-ratios, and the marginal effects. Dual labour market analysts, taking the position that racial differences in labour market access are the effects of large and systematic differentials in returns to equivalent investments in human capital, will no doubt point to the positive and significant (at the 5 percent level) maximum likelihood estimate for the dummy variable ‘Chinese’. Being Chinese, ceteris paribus, increases the propensity of UIM by 37.0 percentage points compared with being Malay or Indian. This seems to lend support to Mehmet’s (1972) arguments of a segmentation of the Malaysian labour market along ethnic lines which favours the Chinese in the private sector. What appears surprising is the negative and significant coefficient for the dummy variable ‘MALE’. Dual labour market theorists have sug5 See Trieman ( 1977). ’ See Gan and Soon (1977, p. 155).
K. -H. Lee / Dualism and the determinants
Table I List of independent (I) Personal
( P)
variables
(3) Status of school of school
(III) Empiqvment
characteristics
( N)
FT=if PFT=
training
(3) Union membership (4) Changed sector of employment (5) Job quits (6) Ownership
of firm
(7) Experience (IV) Motroational
1
UNION = I CHSECTOR
( V) Fami!v background
= 1 if the respondent
has changed his sector of employment QUITS=number of past employers since first full-time employment FORFIRM= 1 if firm is foreign owned or controlled t=years of actual full-time work experience
MARRIED=
1 if respondent is married NODEP=number of people financially dependent upon the respondent
(B
) MED=years
education
(2) Mother’s occupation (3) Father’s education (4) (5) (6) (7)
respondent was given some form of formal training by the present firm if respondent received some form of formal training from past employer(s) if union member
uarrahles ( M)
(I) Marital status (2) Number of dependents
(1) Mother’s
s, = I S”, = 1 s, = I s, = I s, = I s, = 1
S=years of education including postschooling education if English medium if Malay medium if government school if government-aided school if located in the city or municipality if located in a state or district capital
training
(2) Past formal
is of the male sex is Chinese
1
(S)
of instruction
(4) Location
if respondent if respondent
CHINESE=
education
(2) Language
(1) Formal
I
MALE=
(1) Sex (2) Race
(I) Formal
387
variables.
characteristics
(II) Education
of UIM in Malaysia
Father’s occupation Sibling position Family size Childhood environment
SIB=
CE,=l CE,=l
I
of formal education of the respondent’s mother MOC=occupational prestige score FED=years of formal education of the respondent’s father FOC=occupational prestige score if first or last born child FA M= number of children in the family if in the city or municipality if state of district capital
388
K.-H. Lee / Dualism and the determinants
of UIM in Malaysia
Table 2 Maximum likelihood estimates of the determinants of upward function has a significant maximum likelihood ratio statistic). Independent variable
Coefficient (f-ratio)
Constant
- 1.129
MALE
-2.377 a (3.370)
- 0.594
1.480 b (2.360) 0.214 =
CHINESE
s
Marginal effect
Independent variable (continued)
intersegmental
mobility
Coefficient (t-ratio)
Marginal effect
UNION
1.421 b (2.320)
0.356
CHSECTOR
0.918’ (1.750)
0.229
0.370
QUITS
0.602 = (2.800)
0.151
0.054
FORFIRM
-0.050 (0.524)
-0.013
-0.228 (0.384)
-0.057
(1.900) S,
0.227 (0.227)
0.059
MARRIED
Sm
0.028 (0.028)
0.007
NODEP
0.114 (I ,056)
0.029
MED
0.079 (0.955)
0.020
-0.123 (0.190)
-0.031
S,
1.072 (1.290)
0.268
MOC
-0.808 (1.650)
- 0.022
S,
2.157 = (1.710)
0.539
FED
0.114 (0.626)
0.028
S,
1.824’ (1.770)
0.456
FOC
-0.015 (0.704)
- 0.004
1
0.110 (0.808)
0.027
SIB
- 0.446 (0.83 1)
-0.112
- 0.003 (0.637)
-0.001
FAM
0.119 (1.300) - 1.946 (1.590)
FT
2.293 a (3.950)
0.573
CE,
PFT
0.065 (0.081)
0.016
CE,
Number
of cases 2 11
a Significant b Significant ’ Significant
at the 0.01 level. at the 0.05 level. at the 0.10 level.
-0.696 (-0.739)
0.030
-0.486
-0.174
(the
389
K.-H. Lee / Dualism and the determinants of UIM in Malaysia
gested that prior to marriage men are more likely to exhibit the ‘streetcorner’ lifestyle which makes ‘secondary segment’ employment compatible with their modest needs.’ An alternative explanation is that males tend to begin their careers in the lower rungs of the occupational ladder, which offer less scope for upward mobility, than females. a However, the more important point here relates to education and training. The length of formal education has a positive and significant effect on UIM. The quality of education in terms of the location of the school also has a significant impact on UIM. Having one’s schooling in the city (S,.), or in a state or district capital (S,) raises the probability of UIM by 53.9 and 45.6 percentage points, respectively. 9 In relation to employment characteristics, the length of full-time work experience produces no significant result. However, formal training provided by the present firm (FT) greatly enhances the chances for UIM; by 57.3 percentage points-the largest positive marginal effect. Job instability (QUITS) and a change in the sector of employment (CHSECTOR) also produce positive and significant results. The former increases the probability of UIM rather than contributing towards immobility as might be expected under dual labour market theory. The significance of these variables accord better with human capital theory than with dual labour market theory. None of the other variables produce any significant result except for union membership which raises the probability of UIM by 35.6 percentage points. This accords well with general expectations of the role of trade unions.
5. Concluding remarks Two limitations of the analysis should be noted here. First, while schooling, personal characteristics, and family background variables are less subject to change, the employment variables including work experience are subject to changes over time. Where the latter are concerned the appropriate values should cover only up to the period at which UIM occurs. Unfortunately, the present data set does not permit such a fine ’ Doeringer and Piore (197 1, p. 180). * See Mazumdar (1975, p. 10). 9 In Malaysia, urban schools are far better Ministry of Education (1974).
staffed
and equipped
than rural
schools;
see
390
K.-H. Lee / Dualism and the determinants of UIM in Malaysia
distinction to be made. Second, the entire analysis rests on the truncation criterion used; a change in the criterion would no doubt affect the results. From the above, there appears to be considerable room for UIM in Malaysia. Education and training, together with ‘job search’ (defined in terms of ‘QUITS’ and ‘CHSECTOR’), appear to be highly important determinants of UIM. The findings accord better with human capital theory which forms the implicit assumption of the Government’s approach to upward socioeconomic mobility. The case for labour market dualism appears weak though the significance of race as a determinant of UIM lends support to arguments of a segmentation of the labour market which favours the Chinese vis-ri-vis Malays and Indians.
References Doeringer, P.B. and M. Piore. 1971, Internal labour market and manpower analysis (Heath and Co.. Lexington, DC). Federation of Malaysia, 1976. Third Malaysia plan, 1976680 (Government Printer, Kuala Lumpur). Gan. W.B. and L.Y. Soon, 1977. Earnings, human capital and labour market segmentation: A case study of employees in the manufacturing sector, Joint Economic Research Program, no. 5 (Institute of Developing Economies, Tokyo). Lee, K.H., 1980. Education, earnings, and occupational status in Malaysia, 1978. Unpublished Ph.D. thesis (University of London, London). Mazumdar. D., 1975, Education and urban unemployment in Malaysia, Preliminary draft (I.B.R.D., Washington, DC). Mehmet. 0.. 1972, Manpower planning and labour markets in developing countries: A case study of West Malaysia, Journal of Development Studies 8, no. 2. Ministry of Education, 1974, Journal of the Educational Planning and Research Division (Dewan Bahasa dan Pustaka, Kuala Lumpur). Reich, M., D.M. Gordon and R.C. Edwards, 1973. Theory of labour market segmentation, American Economic Review 63, no. 2. Trieman, D.J., 1977. Occupational prestige in comparative perspective (Academic Press, New Yorkj.