Labour Market Dualization and Employment Policy Dynamics

Labour market dualization describes the growing divide between a protected core of well-paid, permanent workers and a peripheral segment facing precarious, non-standard employment. This bifurcation has been driven by globalisation, technological change and a wave of policy reforms aimed at enhancing flexibility. As governments balance employer demands for adjustable labour costs with social objectives of inclusion and security, employment policy dynamics have become central to the debate. Reforms range from liberalisation of hiring and firing rules to the introduction of flexicurity frameworks that couple moderate protection with active labour market measures. The result is a variegated landscape in which institutional legacies, political coalitions and welfare state configurations interact to shape the scope and form of dualization. Understanding these processes is vital for designing policies that foster equitable growth, mitigate social stratification and maintain labour market resilience in a rapidly changing economy.

Research from Nature Portfolio

Recent studies have shown that in service-oriented economies, the interplay between flexibility and job security influences wage inequality. Analysis across multiple OECD countries reveals that political structures characterised by centrist governance and larger electoral districts tend to promote policies that moderate wage disparities by extending security provisions to typically peripheral workers. These findings underscore how institutional configurations and employment policy choices can attenuate the core-periphery divide, highlighting the political underpinnings of labour market dualization and offering a model for reconciling competitiveness with social cohesion.

Labour Market Dualization and Employment Policy Dynamics publication trend

The graph below shows the total number of articles in labour market dualization and employment policy dynamics across all publications each year (not limited to Nature Index journals).

Technical terms

Labour market dualization: Division of the workforce into a protected core and a precarious periphery driven by institutional and policy factors.

Non-standard employment: Work arrangements outside full-time, permanent contracts, including temporary, part-time and platform-based work.

Insider–outsider divide: Contrast between workers with stable, safeguarded positions and those with insecure, limited-rights roles.

Precariousness: Multi-dimensional insecurity encompassing income volatility, weak social protection and job instability.

Employment policy dynamics: Processes of regulatory change and reform that shape the balance between labour market flexibility and worker security.

References

1. Centre party, district magnitude, and wage inequality in service economy. Humanities and Social Sciences Communications (2024).
2. Labour Market Dualism and Diversification in Japan. British Journal of Industrial Relations (2017).
3. Dualization, stratification, liberalization, or what? An attempt to clarify the conceptual underpinnings of the dualization debate. Political Science Research and Methods (2019).
4. ‘Dual’ labour market? Patterns of segmentation in European labour markets and the varieties of precariousness. Transfer European Review of Labour and Research (2021).