Association for Public Policy Analysis & Management

This study has been developed based on the theoretical concepts of the divided labor market in the United States, which involves segmentation and fragmented subsectors in the labor market. The segmented divisions in the labor market generally identify the level of individual skills and work experience. According to the dual labor market theory, the secondary labor market mainly involves economic inequality for the low-income workers with regard to earnings, employment benefits, and social and economic mobility. The characteristics in the labor market structure are also related to the differentiated social protection system in the U.S. While the workers with employment security and stability are usually protected through employment benefits and social insurance system, the unemployed and those with unstable and unsecured employment status often have difficulty due to insufficient social protection through the social and economic system.

This study looks into the structural features in the labor market and the social protection system in the U.S. and examines how employment, labor market factors, and social protection are related, focusing on the public assistance programs and the low-income workers in particular. The analyses for this study also include variations in the standard errors for covariates according to the variance types applied in the model.

Data and Research Method

This study utilizes the Survey Income and Program Participation (SIPP) for the panel 2008, conducted by the U.S. Census Bureau. To examine the proposed inquiries, this study applies multilevel modeling with the mixed effects including individual, household, and state levels. Using this research method, this study can classify the variations on the public benefit program participation among the low-income workers between households in the same state and between states.

Study Results

Based on the results from the analyses, the low-income workers who had health insurance coverage through employers are less likely to participate in the public benefit programs, about 84 percent lower than those who did not have health insurance provided from their employers. Similarly, among the low-income workers, those who had pension or retirement plans covered by employers are less likely to participate in the public benefit programs, about 31.4 percent lower, in comparison with those who did not have retirement plans covered by employers. The results of this study also show some other significant findings regarding the association between labor market components, individual characteristics, and public program participation among low-income workers.

Implication

This study shows that the low-income workers’ participation in the public benefit programs can be associated with specific labor market segmentation and other features in the labor market. In particular, the availability of the employment benefits for the low-income workers is important to understand the individual choice to participate in the public benefit programs. Therefore, this study suggests that the policymakers need to consider how to allocate the responsibilities for social protection between government and employers in the labor market. In addition, it addresses possible limitation in using a secondary dataset and certain statistical methods for the analyses to examine research questions.