This thesis is concerned with the cyclical variations of wage differentials. Here the boom is characterized by the expansion of labor demand and the rising of the price level. And depression is by the contract of labor demand and the falling of the price level. The effect each phases of the cycle have on the wage itself have been the popular theme of macro economics. Especially this thesis attempts to investigate the effect of the cycle on the wage differentials.
Wage differentials premise the labor market segmentation. Hence he review of the theories of labor market segmentation is necessary. This thesis devides the theories into two parts. What is important is the limitationality of the some special labor factor. The limitational labor factor is not able to be substituted for another labor factor in the phase of the rapid expansion of demand. This limitationality assumption predicts that the wage differentials are expanded in the boom, and then the rapid expansion of the wage differentials cause the stagflation. On the contrary, substitutability assumption predicts that the wage differentials contract in the boom.
The cyclical variations of wage differentials shows the characteristics of the labor market segmentation. The essence of the characteristics is the limitationality of some special labor factor. This limitationality changes the ordinary production function in economics textbook which assumes the substitutability of production factors. This thesis, to begin with, is interested in the empirical test of the limitationality of high educated labor factor. Through the test, we investigate the reality of the limitationality assumption of labor factor.
