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Dualisation Project Workshop 14-16 January 2010 at Green Templeton College, Oxford Thursday 14th January 2010 Revised Background Paper/Book Proposal Patrick Emmenegger, Silja Häusermann, Bruno Palier, Martin Seeleib-Kaiser Discussant: Peter Kemp Inequality in most advanced industrial societies has increased during the past decades (OECD 2008). We hypothesise that the increased inequality is to a large extent the result of an increase in dualism. The concept of dualism relates to bifurcations in different realms of society, with ‘insiders’ having access to employment based on standard employment relationships, being sufficiently covered by social protection schemes and represented in the political realm, and ‘outsiders’ having to cope with unemployment or atypical employment, low levels of pay and/or social protection as well as limited political representation. In addition to analysing the extent of dualism, a main contribution of this project is to scrutinise the processes and mechanisms leading to dualism. These processes and mechanisms are conceptualised as dualisation. Processes of dualisation may occur in various domains, such as labour markets, social policy and political participation. An international comparative perspective promises insights into why some countries witness lower levels of dualism, whereas for others, it has become a core characteristic. The aim of this background paper is to situate the project in various literatures (section 1); define the main puzzle and objectives (section 2); explain the dimensions and levels of 2 analysis (section 3); develop core research questions and hypotheses (section 4) and to provide clarifications with regard to the conceptualization and operationalisation of key terms (section 5). Varieties of Dualization? Identifying Insiders and Outsiders Across Regimes Silja Häusermann and Hanna Schwander Discussant: Jacqueline O‘Reilly All post-industrial labor markets become increasingly segmented between insiders who are in standard employment, and outsiders who incur a greater risk of unemployment and/or atypical employment. In this paper, we analyze to what extent this segmentation translates into actual economic, social and political dualism. We argue that this translation depends on institutional welfare regimes. While some regimes countervail segmentation – thereby preventing actual dualism in outcomes -, others perpetuate or even reinforce insider-outsider divides. Empirically, we show that structural change towards post-industrial labor markets has produced similar, but not identical sets of insiders and outsiders across regimes. We then examine the distributional consequences of segmentation with regard to three sets of outcomes: a) labor market dualism, i.e. gross earnings power as well as access to job mobility and training; b) social protection dualism, i.e. the effect of taxes and transfers on net income differentials between insiders and outsiders, pension policy and labor market policy coverage; and c) political integration dualism, i.e. the insider outsider gap in terms of trade union membership and political participation. The chapter demonstrates that the structural trend of labor market segmentation results in different patterns of dualization: continental and southern European regimes perpetuate and even reinforce the insider outsider divide with regard to all three dimensions of dualism. In liberal welfare regimes, outsiders face strong disadvantages in the labor market. However, the liberal welfare state contributes to narrowing the gap between insiders and outsiders in terms of net income. In the Nordic welfare regimes, labor market segmentation is also a reality. However, insiders and outsiders fare more equally with regard to job perspectives, income, welfare rights and political integration. The Impact of Labour Market Segmentation on Social Dualisation in Germany and the UK: A Latent Variable Approach Mark Tomlinson and Robert Walker Discussant: Patrick Emmenegger People occupy different segments of the labour market. Those in the core often have permanent contracts with training and personal development opportunities with their employers, while those in the periphery often have temporary or unstable contracts and less opportunity for advancement. These peripheral workers are often excluded from social arrangements taken for granted by other employees and are not only marginalised within the labour market, but in other areas as well. This paper analyses longitudinal individual data from the UK (the British Household panel Study) from 1991 to 2005 and explores the relationship between segmentation in the labour market and its longer term implications for recurrent poverty experience. Statistical modelling is employed to show how being an outsider in the job market affects poverty in future years. The Insider-Outsider Dilemma: Party Politics, Labor Markets, and Political Behavior in Sweden Johannes Lindvall and David Rueda Discussant : Bernhard Ebbinghaus This paper argues that labor market “outsiders” whose interests are ignored by mainstream leftwing parties become more likely to exit politics or support radical parties. We also argue that left parties face a dilemma: if they propose policies that benefit insiders, they push outsiders to exit politics or to support radical parties; if they propose policies that benefit outsiders, on the other hand, they see their support decline among insiders. We test our claims with data from Sweden, which we argue is a critical case. We analyze electoral data from 1994 to 2006, focusing on the interaction of party politics and individual preferences. Specifically, we explore the relationship between (1) the changing electoral strategies of Swedish political parties – particularly the Social Democrats – and (2) the preferences and party choices of insiders and outsiders in the Swedish labor market. Friday 15th January 2010 Labour Market Dualization in Japan and South Korea Ito Peng Discussant: Martin Seeleib-Kaiser This paper discusses interactions of industrial relations, labour market and welfare regimes in the two East Asian political economies of Japan and Korea. It argues that both countries have been going through a re-articulation of their political economies since the 1990s in response to the changing global economic context. Although it is still early to know exactly where this will lead, the direction of changes thus far suggests a move towards increased dualization. Second, the dualization processes observed in Japan and Korea is not only intensifying the existing labour market dualism, along the lines of gender and establishment size, but also adding to it a new demographic dimension, with overall effects of increased income inequality and disrupted individual life course patterns. Third, the disruptions to the traditional institutional arrangements in these countries have also spurred the state to take more active role in social welfare: in the case of Japan through gradual policy changes in response to the socio-economic disruptions and rapidly ageing population; while in the case of Korea, a more radical resetting of economic and social policies in response to the changing contexts. In either case, politics and political processes have made significant differences in determining state responses to socio-economic changes. And in both cases, employment insurance schemes have been expanded, and reformed, to support and to re-skill those falling out of the labour market, and new social provisions – particularly longterm care insurance and child care – have been introduced to meet the care needs of the old and young, and to incentivize fertility increase and women’s employment. The rest of the paper examines the processes of economic dualization in Japan and Korea by tracing the political economic dimensions of the three subsystems, industrial relations, labour market, and the welfare state, and how they interact with each other. The last section will attempt to synthesize the learning from the two East Asian cases. Coping with Dualisation? Labour Market Policy Reforms in Small Open Economies since the 1990s Alexandra Kaasch, Julia Moser, Herbert Obinger and Peter Starke Discussant: Des King The paper is less about labour market dualization as a social or economic phenomenon but rather about dualism as a political problem. Since there is little systematic research that seeks to explain dualization by political factors, this paper is concerned with the interrelationship of labour market and social policy developments, and their underlying politics. The trend towards dualization and rising inequality is not comparatively analysed but rather taken as a given on the basis of comprehensive evidence (cf. OECD 2008; ILO 2008). Instead, it is interested in the ways in which dualization enters the political agenda and, in particular, the various social policy responses that can be linked to the phenomenon. Has dualism, i.e. a divide between labour market insiders and outsiders, received more attention in recent years across OECD-countries? And, if so, have different welfare states responded in different ways to that problem and why? In this chapter insiders are defined as ‘those workers with highly protected jobs. Outsiders, by contrast, are either unemployed or hold jobs characterized by low levels of protection and employment rights, lower salaries and precarious levels of benefits and social security regulations’. The paper looks at responses to dualism in Austria, New Zealand, Sweden, and Switzerland since 1990. The four countries showed significant differences in terms of their welfare state patterns, political systems and labour market policies at the end of the Golden Age and all of them have witnessed increasing labour market dualization, e.g. rising shares of parttime (mostly women) and temporary workers. The paper starts its analysis in the early 1990s when economic structural changes confronted governments with challenges of labour market dualism. Dualization and the Service Economy: Employment Patterns in Bismarckian Welfare States Werner Eichhorst and Paul Marx Discussant: Olli Kangas During the post-war period, Bismarckian welfare states developed an institutional arrangement around full-time regular employment in manufacturing. The sectoral shift from industry to services has major implication for the structure of jobs and the institutional setting as some parts of the private service sector to not fit into the established pattern of employment and social protections and collective bargaining due to lower productivity. Hence, to stimulate job growth in private services and to increase employment opportunities for low-skilled people Bismarckian countries had to allow for the development of labour market segments deviating from standard working conditions. Based both on deliberate policy reforms and micro-level action by employers and employees, different options of non-standard employment such as fixed-term jobs, temporary agency work, selfemployment and low-pay jobs grew in importance. The chapter shows the divergence of non-standard work in five countries and relates this to the institutional opportunities available to employers and employees. The specific role these options play varies across the Bismarckian countries as does the political economy behind the de- and re-regulation of atypical work. The Politics of Dualisation in Unemployment Protection Policy: A Franco-Belgian Comparison Daniel Clegg Discussant: Anke Hassel The aim of this paper is to explore the apparently contrasting institutional and distributive choices made in France and Belgium concerning Unemployment insurances.It emphasises in particular the role of the differing incentive structures that confronted organised labour in the two cases, as a result of variations in the nature of social governance institutions in the unemployment protection sector. While it has long been recognised that the administrative functioning of labour market institutions can have feedback effects on extent and profile of trade union membership, the argument in this paper is that it can also shape the organisational interests of trade unions in ways that are consequential for patterns of social policy choice, even (and perhaps particularly) in a context of ‘permanent austerity’. Given the role of diverse social protection institutions in shaping actor interests and strategies, the paper suggests, tendencies to polarisation in the labour market can produce very different social policy responses, even within similar welfare production regimes. United We Stand, Divided We Fall: the Impact of Labour Market Dualization on Tax Progressivity Achim Kemmerling Discussnant : Pablo Beramendi This paper uses the economic notion of insidership in labour markets to explain the (relative) decline of the (low-wage) tax progressivity. It show the merits and also some limits of such an approach. There is some reason to believe that dualisation, defined as a conflict of insiders and outsiders, is one of the determinants of the recent decline in tax progressivity. The theoretic rationale is that in a labour market with institutionalized insiders, a low tax burden for low-skilled workers constitutes a threat for established jobs and the bargaining power of unions. The paper uses two sorts of empirical evidence to prove this hypothesis: (1) pooled data for OECD countries shows that the macro-aggregate variation is in line with the hypothesis; (2) a comparative case study of the UK and Germany shows that it explains recent differences in the evolution of tax progressivity. From Dilemma to Dualisation: Social and Migration Policies in the ‘Reluctant Countries of Immigration’ Patrick Emmenegger and Romana Careja Discussant: Bruno Palier Western European governments face a dilemma. On the one hand, the immigrant population in their countries keeps growing due to the refugees they are obliged to admit, the constitutional right to family and the economy’s need for labour market flexibility and skills. On the other hand, the public opposes large-scale immigration and wants to restrict immigrants’ access to social benefits. We argue that France, Germany and Great Britain, often described as ‘reluctant countries of immigration’, solve this tension by dualising their societies. Firstly, they actively encourage the immigration of ‘desired’ workers, while erecting barriers to entry for ‘undesired’ immigrants. Secondly, they adapt their social security systems in order to diminish the transfer of resources from citizens to immigrants. These welfare reforms do not lead to a ‘race to the bottom’, as famously foreshadowed by Alesina and Glaeser (2004). Rather, the supported reforms are selective. Nevertheless, these developments have also important consequences for national citizens. For legal reasons, many measures that target the social rights of migrants lead to reforms of programmes that also provide benefits for citizens. Thus, although fuelled by welfare state nationalism, these reforms contribute to a bifurcation of Western societies with many citizens and few high-skilled migrants reaping the benefits of the European social model and some citizens and many migrants carrying the burden of economic adjustment. Saturday 16th January 2010 Shifting the Public-Private Mix: A New Dualization of Welfare? Martin Seeleib-Kaiser, Adam Saunders and Marek Naczyk Discussant: Kathleen Thelen Welfare dualism has always been part of social protection arrangements in Liberal and Conservative welfare states. However, during the ‗golden era‘ of welfare state capitalism, the Liberal and Conservative welfare states demonstrated two different kinds of welfare dualism. Liberal welfare states provided means-tested public policies for the poor and relied heavily on occupational welfare for the middle class, whereas Conservative welfare states provided social insurance for workers and means-tested policies for the non-working poor. We hypothesise that in Liberal welfare states occupational welfare provision is declining and an increasing percentage of the population is becoming reliant on state welfare. In contrast in Conservative welfare states, an increasing proportion of people, previously covered by social insurance, have to rely on means-tested welfare benefits. In parallel certain sectors are expanding the provision of occupational welfare. We argue that these developments can largely be explained by deindustrialization, changed preferences among employers and prevailing governance structures Institutionalizing Dualism: Complementarities and Change in France and Germany Bruno Palier and Kathleen Thelen Discussant: David Rueda The French and German political economies have been significantly reconfigured over the past two decades. Although the changes have often been more piecemeal than revolutionary, their cumulative effects are profound. We characterize the changes that have taken place as involving the institutionalization of new forms of dualism, and argue that what gives contemporary developments a different character from the past is that dualism is now explicitly underwritten by state policy. We see this outcome as the culmination of a sequence of developments, beginning in the field of industrial relations, moving into labor market dynamics, and finally finding institutional expression in welfare state reforms. Contrary to theoretical accounts that suggest that institutional complementarities support stability and institutional reproduction, we argue that the linkages across these realms have helped to translate employer strategies that originated in the realm of industrial relations into a stable new and less egalitarian model with state support. Discussion of deadlines for final manuscripts etc.