According to the segmented labor market theory, firms in competitive markets have no real incentive to eliminate the wage gap once it is established.

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Segmented labor market theory suggests that the labor market is divided into separate segments or tiers, with different wage levels and working conditions. Firms in the secondary, less competitive segment may have little incentive to eliminate wage gaps, as these gaps can be a result of, or contribute to, the segmentation itself, allowing firms to benefit from lower labor costs.

According to the Segmented Labor Market Theory, Firms in Competitive