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Insiders under pressure: Flexibilization at the margins and wage inequality

Published online by Cambridge University Press:  03 September 2020

DAVID WEISSTANNER Open the ORCID record for DAVID WEISSTANNER [Opens in a new window]
DAVID WEISSTANNER*
Affiliation:
Department of Social Policy and Intervention, University of Oxford Email: david.weisstanner@spi.ox.ac.uk
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Abstract

The rise of flexible employment in advanced democracies has been predominantly studied in the insider-outsider framework of the dualization literature. However, against the background of rising income inequality, it seems questionable to assume that all labor market insiders are equally affected by flexibilization. This paper explores whether flexibilization increases wage inequality among labor market insiders. I argue that flexibilization exposes insiders to a set of wage risks that are concentrated among low- and middle-income insiders, creating downward wage pressure on those insiders. The empirical analysis, covering 22 democracies between 1985 and 2016, finds that the deregulation of non-standard employment is associated with declining wage shares of low-income and middle-income earners, while top earners benefit. These major distributional shifts imply an important qualification of the dualization literature: rather than pitting insiders against outsiders, flexibilization ‘at the margins’ seems to exacerbate divides among insiders.

Keywords

flexibilizationwage inequalitydualizationlabor market policyinsidersoutsiders
Type
Article
Information
Journal of Social Policy , Volume 50 , Issue 4 , October 2021 , pp. 725 - 744
Copyright
© The Author(s), 2020. Published by Cambridge University Press

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