Segmented labor market theory is one of the basic assumptions of the perfectly competitive model which is that all jobs in the labor market are open to competition. This does not mean that a waitress can quit her job and immediately become a doctor or that an unskilled laborer can effectively compete for an ironworker’s job since each person’s sphere of competition is limited in the short run by his or her education, job skills, geographic location and mental and physical abilities.
The presumption of competitive theory however, is that the walls separating labor markets are relatively porous so that workers given enough time to acquire the training or to move to a different city can effectively compete for jobs on an equal footing with persons already in that labor market.
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