This article examines labour market segmentation theories with particular emphasis on institutional and dual labour market approaches. The study analyses the theoretical foundations of labour market segmentation, explores the role of institutions in shaping employment opportunities, and evaluates the implications of labour market dualism for economic efficiency and social equity. Drawing upon international empirical evidence and recent developments in developing economies, the paper demonstrates that labour markets are characterised by structural heterogeneity rather than perfect competition. The findings indicate that institutional arrangements, labour regulations, educational systems and organizational practices significantly influence workers’ mobility between labour market segments.