Labor Market

Whereas economists analyze labor markets in terms of fluctuations in supply and demand for workers in various occupations, sociologists focus on other factors that influence employers' decisions to hire individuals and workers' ability to position themselves advantageously. Most sociological research explores how employees' human capital (i.e., education and training) prepares them for labor force entry and assists them in securing employment. Early attempts were made to distinguish between external and internal labor markets, with the former referring to recruitment outside of any particular organization's jurisdiction and the latter reflecting employers' use of career ladders and incentives to identify the most qualified in-house candidates for promotion.

Another strand of sociological research on labor markets examines how workers find employment. Mark Granovetter acknowledges the importance of human capital variables in helping workers find jobs and highlights the role of social networks in disseminating information about job openings. Granovetter finds that information gathered from those people to whom workers are closest (strong ties) is not necessarily more valuable than tips workers receive from informal associates (weak ties). This is because strong ties rarely are able to share additional labor market information because of cultural homogeneity, whereas weak ties garner diverse data because of their social distance from job seekers.

Oliver Williamson proposes that employers weigh the risks and benefits of utilizing labor markets (hiring outside contractors to fulfill specific needs) or hierarchies (developing organizational structures that foster long-term, internal labor markets). Successful firms outsource and hire workers in-house, according to their needs. By simultaneously relying on external and internal labor markets, firms can adjust to economic expansions and recessions.

Sociologists study how labor markets reflect inequalities, especially according to race and sex. A labor market segmentation hypothesis argues that in the developed world, white males occupy a series of privileged core positions while nonwhites and women are barred from entry into these labor markets and forced into secondary, peripheral jobs. Barbara Reskin and Patricia Roos find that employers create schemas (job queues) that set aside attractive, high-paying jobs for white males and relegate nonwhites and women into undesirable positions. This discrimination intensifies labor market segmentation, leading to sex- and race-based segregation at work. Samuel Cohn finds evidence that outright discrimination excludes women and nonwhites from higher-status jobs. A final strand of sociological research of labor markets examines the role of third-party organizations, namely, labor market intermediaries. These organizations are effective in streamlining hiring practices, reducing job search costs, and matching workers with quality jobs.