The Political Consequences of Labor Market Dualization: Theory and
Empirical Evidence ∗
Charlotte Cavaille†
(Harvard University)
May 13, 2014
Abstract
An important body of literature has documented the emergence in European countries of a
two-tiered labor market with highly protected jobs on the one hand, and highly flexible and
insecure ones on the other. According to a thriving line of research, this dualization generates
a policy preference divide between insiders, those with secure jobs, and outsiders, those without. Using the European Social Science survey, I assess the theoretical and empirical usefulness
of this insider/outsider framework for developing testable propositions on the political consequences of labor market segmentation. As hypothesized by the literature, I find an opposition
between insiders and outsiders on redistributive policies favorable to outsiders in countries
where changes in labor market regulation and social policy have encouraged such segmentation. However, I caution against using this framework to study political change in advanced
capitalist countries. First, outsiders living with insiders behave mostly like their partner, decreasing the numerical relevance of the outsider group as a community of shared interests.
Second, a focus on the labor market status as defined by the insider/outsider model does not
give us much additional information on the determinants of political preferences and behavior. Cross-sectionally, independent effects are small and the framework fails to provide new
insights on the well-know correlations between gender, age, skill-level or income on the one
hand and political behavior on the other. When examining attitudinal change over time in a
most likely case (Germany) I find attitudinal convergence -not divergence- between insiders
and outsiders. If economic change is creating a new cleavage, it is one that pits low-income
and low skilled workers against high-income and high skill ones, nothing that existing models
cannot handle.
∗ To
be presented at the Council for European Studies Annual Conference (Washington DC, March 14-16 2014). I
am especially thankful to David Rueda, Sandy Jencks and Alisha Holland for detailed and insightful comments.
† Email: [email protected]
1
Introduction
An important body of literature has documented the emergence in European countries of a
two-tiered labor market with highly protected jobs on the one hand, and highly flexible and
insecure ones on the other. The framework has attracted a lot of attention among social scientists interested in studying the political consequences of the transition to a post-industrial
economy. According to this thriving line of research, this segmentation of the labor market
generates a policy preference divide between insiders, those with secure jobs, and outsiders,
those without. This paper aims at providing a broad assessment of the political relevance of
this framework. Two questions guide this inquiry: what is the difference between an insider
and an outsider and how should we measure it? How much does this distinction matter for
electoral politics;1 i.e. do outsiders have different policy preferences and political behaviors
than insiders?
I distinguish between two ideal-typical approaches to the insider/outsider divide. One
defines insider and outsider status as two opposite poles on a continuum: proximity to either
pole is defined by one’s degree of exposure to unemployment risk. At one extreme, the risk is realized and one is unemployed. At the other, the risk is close to null. Position on this continuum
is estimated using individual-level characteristics predictive of employment security (e.g. industry, occupation, education, skills...etc...). I argue against such approach: to be more faithful
to the core and innovative intuitions of the original insider/outsider models (Berger and Piore
1980; Rueda 2007), one needs to start from individual labor market biographies as shaped by
labor market legislation and the institutional set-up regulating access to social insurance and
benefits.
How might individuals with such atypical employment biographies differ from individuals who are in stable jobs with secure access to social benefits? A first hypothesis is that insiders
and outsiders will have different policy preferences regarding labor market reform and social
insurance provisions. I call it the diverging interests thesis. A second hypothesis emphasizes
the disenfranchisement of marginalized outsiders, independent of a divide between insiders
and outsiders on key policy issues. I call it the marginalization thesis. Each have very different
implications for the political significance of labor market dualization. The former points to a
potential political cleavage that strategic political entrepreneurs could activate. The latter argues that this population might be too difficult to mobilize, irrespective of diverging interests.
I expect these differences to be consequential mostly in countries where political institutions,
labor market policies and social policies enhance the material differentials between the two
groups.
To test my argument, I use the European Social Science Survey, relying on cross-sectional
variation to examine the relationship between labor market experiences and preferences in 15
European countries.2 I find Germany to be a most likely case of insider/outsider conflict and
1I
focus here on demand side politics and more specifically on mass policy preferences.
are: Austria, Belgium, Denmark, Finland, Germany, Great Britain, Greece, Ireland, Netherlands, Norway, Portugal, Spain, Sweden and Switzerland. France and Italy had to be taken out of the sample because of
2 Countries
2
switch to a longitudinal analysis of attitudinal change in this country. Over the 2002-2012 period, support for redistribution has increase in Germany. I examine whether or not this increase
is higher among labor market outsiders than secure insiders.
My results indicate that labor market dualization is unlikely to become politically significant in the years to come. Many outsiders live with insiders and share their partner’s policy
preferences, decreasing the numerical relevance of this group. More generally, a focus on labor market status as defined by the insider/outsider model does not give us much additional
empirical leverage. Independent effects are small and fail to provide new insights on the wellknow correlations between gender, age or income on the one hand and political behavior on
the other. I find stronger evidence for the marginalization thesis, decreasing further the likelihood that existing (small) attitudinal differences will impact electoral politics.
As hypothesized, there are important scope conditions to the insider/outsider divide.
The divergence between insiders and outsiders does yield potential political clout in countries
with highly segmenting legislation and institutions (here Germany and Austria). This crosssectional patterns finds little empirical corroboration in a longitudinal analysis of attitudes:
over-time, insiders in stable contracts, without previous experiences with unemployment, have
converged toward outsiders in their support for government redistribution, closing the gap between the two groups.
In the first section, I review briefly the insider/outsider literature and emphasize its key
contribution to the study of the relationship between economic and political change. In section two, I present three sets of hypotheses than can be derived from this framework. Section
three describe my empirical strategy for testing them as well as a descriptive account of insiders and outsiders as captured by the ESS. I present the cross-sectional results in section four
(the “diverging interests" thesis) and five (the “marginalization thesis"). Section six presents
the (tentative) results of an over-time analysis of German longitudinal data. Section seven concludes.
1 Labor Market Dualization: cause and consequences
The six decades that separate us from the end of WWII have been a time of sustained growth
for developed democracies. Though this trend has remained positive on average, its intensity
and impact on Western societies has varied greatly over time. The period of high GDP growth
and widely shared socio-economic improvement ended with the mid-1970’s recession. For
the past three decades, Europe has been plagued by high unemployment while, in the United
States, wealth inequalities have sky-rocketed (Smeeding 2005; Alesina and Glaeser 2006; Atkinson 2003). This understanding of the post-WWII period in terms of a 1980’s “turn" forms the
background of many research agendas looking at contemporary politics in Western societies.
Most observers link it to changes in the economic structure of advanced democracies (Kitschelt
issues with their measure of household income. In examining redistribution preferences, I have to also take out
Austria and Ireland for the same reasons.
3
1994). De-industrialization and the parallel growth in the service sector, heightened international competition and the transition away from Taylorist modes of production have resulted
in dramatic changes in advanced democracies’ labor markets (Appelbaum and Schettkat 1999;
Iversen and Wren 1998; Eichengreen 1997, 2008; Iversen and Cusack 2000a).
Attempts to identify and assess the social consequences of these economic shifts (especially in Western Europe) have often focused on the increase in the share of the working population excluded from access to stable, secure jobs and to the social benefits that often accompany
such jobs. Across all Western European countries, there is indeed a growth in what is loosely
described as labor market outsiders, i.e. individual whose work biographies depart from “the
industrial blueprint of stable, full-time and fully insured insider employment" (Hausermann
and Schwander 2009: 2). Outsider status in the new economy is no just limited to long-term unemployed individuals. It also includes a growing proportion of the employed labor force confronted with unstable employment relations and shrinking social protection. While early observers described this phenomenon as one of gradual erosion of the “wage-earner status" (Castel 1995), recent research argues that concepts such as “segmentation" or “dualization" provide
a more accurate account of the nature of these changes (Palier and Thelen 2010; Emmenegger,
Palier and Seeleib-Kaiser 2012).
Students of labor market segmentation start from the observation that, despite a growth
in the number of labor market outsiders, a large majority of the work force is still constituted of
secure and protected workers. Labor regulation and robust social insurance entitlements play
an important role in isolating these insider workers from new post-industrial constraints on labor cost (Rueda and King 2009; Streeck 2009; Iversen and Soskice 2009; Andress and Lohmann
2008). Changes in labor regulations and social policy design (or the active effort to avoid policy
reform, see Hacker (2005)) are central to insider/outsider models of labor market dynamics.
They have favored the dualization of the labor market by creating, alongside long-term highly
protected labor contracts, short-term contracts with fewer social rights attached to them (lower
or absent retirement benefits, lower unemployment and severance benefits). DiPrete et al.
(2006) show how the French labor market has absorbed macroeconomic shocks through the
creation of low-adjustment cost or low security jobs. In the past five years, more than 90 percent of newly created jobs in the Netherlands have been either part-time or fixed term contracts. In Germany, atypical employment increased from 17.5 to 25.5 percent of the workforce
during the decade 1997 and 2007 (Streeck 2009).
Employment insecurity in this literature is thus tightly linked to the type of contract a
wage earner is working under (e.g. permanent vs fixed-term, see Maurin and Postel-Vinay
(2005)) and the prevalence of bouts of unemployment in an individual’s biography, which is
often correlated with the type of labor contracts one was previously hired on. A large share
of the research thus aims to assess the mid to long-term impact of these differentiated labor
contracts. Are fixed term and short-term contracts a bridge into stable jobs or a trap limiting
concerned workers to bad jobs ((Polavieja 2005)? How are are future job quality and wage levels
impacted by on’e current labor market position (Blanchard and Landier 2002; Chauvel 2010)? Is
employment insecurity disproportionately concentrated on certain demographic groups such
4
as young individuals and women (Esping-Andersen 1999)? How correlated is it with skill levels
(DiPrete et al. 2006; Maurin and Postel-Vinay 2005) ?
What drives this segmentation of labor market experiences? A return to the origins of
this literature is here helpful. Insider/outsider models first appeared in labor economics and
were mainly developed in reaction to one main puzzle namely the resilient unemployment
levels of the 1980’s and onward. Economists blamed labor market regulations for granting employees high levels of bargaining power, which had the side effect of pricing part of the labor
force out of the labor market. Insiders are the incumbent workers protected by high firing costs
and outsiders are unsuccessful new entrants, kept away from good jobs by the unintended consequences of legislation protective of those lucky enough to have a job (Lindbeck and Snower
1988, 2002). Saint-Paul (1996, 1998) developed this model further to argue that “insiders create
outsiders”. According to Saint-Paul, “since the (insiders) are more numerous and better organized than (outsiders), labor market institutions are determined for the interests of the former”
(Saint-Paul 1996: 266). He argues that a decrease in their bargaining power (right-wing government, occupational exposure to unemployment, general unemployment level) would reduce
market rigidities and labor market dualism. The creation of atypical contracts can thus, in this
framework, be understood as a way to preserve insiders’ benefits while facilitating access to the
labor market for unemployed and new entrants. The outcome is a dualisation of the employed
labor force between good vs bad jobs.
While recent labor market reforms have opened the labor market to previously excluded
(unemployed) outsiders, they have indeed preserved the duality between secure and uncertain
career prospects. The introduction of “flexibilization" policies in the mid-80’s and in the 90’s
has had an important impact on European labor markets. Labor market de-regulation was not
the “relaxation of employment protection in the shrinking core of national employment systems" but “an expansion of ‘precarious’, ‘untypical’, non-standard employment on the fringes
of national systems" (Streeck 2009). Indeed, the OECD strictness of protection index for regular
employment did not change between 1990-2006. On the other hand, the index for temporary
employment declined by 1.1 units on average.3 Spain provides a striking example: less than
five years after the 1984 reform, a third of the labor force was on a fixed-term contract and 80
percent of new entries into and exit from employment took place in the flexible segment of
temporary work (Polavieja 2005). In the French case, partial reform of employment protection
has had negative impact on young individuals’ welfare, increasing turnover without a substantial reduction in unemployment duration (Blanchard and Landier 2002).
Building on this literature, Rueda (2005, 2007) examines the politics behind this dualization of labor legislation. In their attempt to preserve the job stability and social benefits of their
core insider constituency, he argues, social-democratic parties have facilitated the emergence
of precarious employment and disregarded this group’s well-being. A close look at welfare re-
3 This
index measure the strictness of employment protection legislation using legislation on dismissal and on
labor contract regulation. Its scale ranges from a level of protection of 0 (low) to a level of protection of 6 (high).
Most countries are between 1 and 3.5. A change of 1.1 thus represents a significant change in labor regulation.
5
form in countries like Belgium, Germany or France points indeed to a trade-off between insiders and outsiders’ interests: the generosity of the existing social insurance schemes, which
mainly benefits insiders, has been preserved at the expense of outsiders’ inclusion into the existing system (Clasen and Clegg, 2006; Palier and Thelen, 2010). In this approach, labor market
dualization is the result of a highly political process between insiders (or their representatives)
trying to protect their job security and benefits and outsiders (when they are represented) asking for their own seat at the table. This version of the insider/outsider framework thus posits
a trade-off between the interests of each group and emphasizes the role of policy in defining
whom insiders and outsiders are.
A second line of research shifts the emphasis away from the institutional basis of risk exposure (i.e. differences in the rights and protections granted by different labor contracts) and
focuses instead on the correlation between one’s demographic characteristics and skill profile
and one’s propensity to be in a good or a bad job (or unemployed). Here outsiders are not
those in bad jobs per se but the “social groups" who are the most at risk of being in these bad
jobs. The nature of these social groups is, of course, conditional on existing legislation (i.e.
labor market regulation protective of seniority increases the probability that outsiders will be
new labor market entrants). However as important if not more is the role played by skill-level,
skill-specificity, or gender-specific career patterns as shaped by long-term secular trends such
as occupational change (David and Dorn 2009; Goos and Manning 2007), de-industrialization
(Iversen and Cusack 2000b), and broad changes in the labor force’s skill composition (Iversen
and Rosenbluth 2006).
This literature, which I will call the “risk exposure" literature, thus conceives of these
divisions in much broader terms.The expressions “insider" and “outsider" are often used to
define two opposite poles on a continuum: proximity to either pole is defined by one’s degree
of exposure to unemployment risk. Position on this continuum is estimated using individuallevel characteristics predictive of employment security (e.g. industry, occupation, education,
skills...etc...). In a recent paper Hausermann, Schwander and Kurer (2014) use a “continuous
measure of labor market vulnerability" to measure one’s status as an insider or an outsider.
They assign to each respondents in the survey a measure of their risk of being unemployed or
in a bad job (voluntary part time, fixed term contract..etc.) as proxied by the frequency of these
outcomes in the respondent’s occupational group. This empirical strategy is in essence that developed by Philip Rehm in his work (Rehm 2008, 2009) on unemployment risk exposure, with
the caveat that in addition to unemployment risk, Hausermann and co-authors also include
the risk of being in an unstable job. Thanks to Rehm, who was himself building off a strong line
of research triggered by Moene and Wallerstein (2001)’s paper on risk exposure and demand for
social insurance, we have a better understanding of the distribution of support for government
provided income protection by skill-level and occupation. In cross-sectional data, individuals
with high levels of employment risk are more likely to support policies that will help them mitigate these risks, controlling for other measures of material well-being. Recent work is currently
trying to extend these findings to our understanding of over-time political dynamics (Alt and
Iversen 2013; Rehm 2011; Rehm, Hacker and Schlesinger 2012). Central to these models is the
correlation between expected permanent income (as proxied by current income or skill-level)
6
and exposure to income shocks (variance in transitory income).4
There are many obvious connections between this literature and insider/outsider models of labor market dynamics. As already mentioned, labor contract legislation core to the
insider/outsider literature shapes how risk is distributed in a population (Rehm, Hacker and
Schlesinger 2012). Fundamentally, insider/outsider models are mostly about differentials in
risk exposure. However, conflating these two literature comes at a cost.
Insider/outsider models of labor market dynamics might be better understood as a subset of a general literature on risk exposure focusing on the role of legal boundaries for shaping
the distribution of risk. The risk exposure literature on the other hand focuses on a wealth of determinants of risk beyond legally sanction rights and protections. High levels of risk exposure
is not just linked to one’s labor contract but also to one’s position in the production function
has defined by one’s skills and job experience. In a changing economy there are natural “winners" and natural “losers" as a function of one’s skill profile and local job opportunity structure
(defined by social background and geography). The main contribution of the insider/outsider
model is to highlight how legally sanctioned rights and boundaries can both reinforce and upset these economic changes. By moving to a broader (and continuous) measure of risk exposure, we lose this key insight of the insider/outsider literature.
Esping-Andersen (1999), for instance, shows how labor regulations also benefit lowskilled workers in Europe, a group of workers that is classified by Hausermann and Schwander (2009) as outsiders. He argues that “strictness of job protection shelters those already employed, even the low-skilled" (Esping-Andersen 1999: 136). It is thus one’s position on one side
or the other of the insider/outsider legal divide that matters here. Political decisions to protect
the “losers" of globalization and economic change is at the core of these models and should
remain so. With regards to the topic a hand in this paper, an important prediction of these
models is that a low skilled service workers protected by a stable labor contract will behave differently from an individual in the same position but working under an atypical labor contract.
Rueda thus predicts that outsiders might turn against legislation protective of insiders, even if
it protects individuals with similar skill profile as theirs. Protests in France against flexible labor contracts for youth could be interpreted as the manifestation of such dynamics. However
protesters also expressed strong support for the “contract a duree indeterminee" vindicated by
many economists as responsible for high labor costs (and high unemployment). This paper is a
systematic exploration of these dynamics, which require a careful distinction between general
(un)employment risk exposure and one’s legally sanctioned status as a protected insiders or a
“flexible" outsider.5
4 Moene
and Wallerstein (2001) hypothesized a positive interaction between the two, explaining high levels of support for redistribution among well-to-do but risk exposed voters. This pattern is however hard to find in the
existing data.
5 I thus strongly encourage to limit the use of the terms insider/outsider to these models and literature. The risk exposure literature in contrast might be better off using concept such as core vs peripheral workers which directly
refer to one’s centrality to a country’s economic infrastructure
7
2 The Political Consequences of (Legally Sanctioned) Labor Market
Dualization
Is there any explanatory power in describing the labor force as divided between insiders and
outsiders? In their examination of labor market insiders and outsiders, labor economists have
hypothesized about differences in these groupes’ preferences regarding wage levels and labor
contracts, focusing mainly on the firm level. As early as 1990, Esping-Andersen (1990) shifted
the focus to the political arena and hypothesized the existence of a potential conflict between
the wage-maximizing preferences of insiders those with jobs and the job-expansion objectives
of outsiders, those without (Esping-Andersen 1990: 227). While unemployed individuals might
prefer to bring labor costs down to increase the number of jobs, insiders want to maintain costincreasing but protective legislation to maintain their current income levels (what economists
might call rent extraction). He argued however that this was limited to non-Scandinavian corporatist welfare states where the link between stable employment and good social protection
heightens the inequality between stable labor market insiders, protected by stringent labor
legislation and a growing group of unemployed outsiders. The development in these countries
of atypical labor contracts alongside the preservation of the unlimited, highly protected labor
contracts has added to unemployed workers a group of loosely connected labor market outsider.6 Tests of this claim have yield ambivalent results. 7
In a seminal work, Rueda (2005, 2007) expands this reasoning beyond unemployed workers to include all individuals working in atypical, insecure labor contracts and examines variation in policy preferences with regards to national labor market policy. He distinguishes between three types of policy: employment protection legislation (the laws that regulate hiring
and redundancy, specifying employer and employee’s right and duties), active labor market
policies (policies that support the transition from unemployment to employment) and passive
labor market policies (support for the unemployed through social benefits). Rueda argues that
insiders and outsiders have contradictory interests that will result in opposite preferences for
each of these policies.
What are these groups’ interests and why are they in contradiction? Insiders want job security and high wages. They obtain these through protective labor legislation. This decreases
the employability of outsiders by increasing hiring costs and closing the labor market to underbidding by outsiders. Outsiders want to enter the job market to find a stable source of income
while insiders thrive through their own control of labor market access. It offers the latter job
and income stability when the former’s conditions are precarious and poorly paid. Both are
seeking security; where the antagonism appears is in the fact that insiders need to exclude out-
6 See
also the work by Palier and Thelen (2010) and citeclasen2006, clasen2007 mentioned above. Their work also
points to labor market dualization as specific to conservative welfare states’ politics and institutions.
7 Svallfors (1997), defining outsiders as those without job, finds that they are indeed more likely to support government intervention than employed individuals. This seems to be the case accross all countries, to the exception
of anglo-saxon ones. More importantly, Svallfors finds that in no countries does the insider/outsider dichotomy
dominate class differences in support for government intervention: if cleavage there is, it is mainly between high
skill/high income and low skill/low income groups, with no additional explanatory power of job stability.
8
siders to be secure and benefit from high wages while outsiders need to destabilize insiders to
increase their own income stability. The main outcome is opposed policy preferences: insiders
favor labor regulations that make turnover costly and buttress their insider status whereas outsiders would like such regulation to disappear, so they can find a job more easily. Passive labor
market policies such as unemployment benefits will be preferred by outsiders but not by insiders, who do not need them and do not want their taxes increased to finance them. Active labor
market policies directly aimed at increasing outsiders employability through training and employment subsidies are supported by outsiders but opposed by insiders who do not want to pay
the cost of a policy that does not serve their interests. If indeed insiders and outsider differ in
their level of job security then one might extent these predictions to redistribution preferences
more generally. Because outsiders are in insecure labor market positions, they will demand
more income support policies such as unemployment insurance, health care and social transfers in general.8
The first hypotheses to test are the following:
• H 1 : “Outsiders are more favorable, relative to insiders, to policies that decrease employment protection and more generally employment costs"
• H 2 : “ Outsiders are more favorable, relative to insiders, to policies that support job expansion and buttress unemployment benefits. They are also more favorable to social
spending and income redistribution more generally."
These theories point to a possible tension in the political inclinations of outsiders: their
opposition toward job protection legislation puts them on the conservative side of the political spectrum while their support for unemployment benefits and redistributive policies puts
them on the social-democratic side. Rueda goes a step further and argues that outsiders’ interests have been, at best, neglected by social democratic parties. The existence of an inherent
trade-off between Insiders’ and Outsiders’ welfare is central to Rueda’s political account of the
insider/outsider divide. In their attempt to preserve the job stability and social benefits of their
core insider constituency, social-democratic parties have facilitated the emergence of precarious employment and disregarded this group’s well-being. One prediction stemming from this
account is that outsiders could be vowed by conservative parties in voting for labor market
de-regulation. A weaker version, merely predicts that outsiders, feeling neglected by social
democratic parties but not represented by conservative parties could feel less close to a political party than insiders do. Hypothesis two however suggests a potential redistributive tension
8 Hausermann
and Schwander make a more specific claim: instead of focusing on the level of support for the welfare state they argue that insiders and outsiders will differ in the type of welfare state they support. Outsiders
should oppose the “equivalence principle", namely the proportional link between contributions and benefits.
Indeed a contribution based welfare state puts at a disadvantage individuals with intermittent access to employment. More specifically, many of these atypical labor contracts give very limited access to contribution-based
social insurance programs. Outsiders should thus favor a more redistributive scheme between high and low
income that would finance both unemployment benefits and investment in education and employability. Insiders on the other hand favor social insurance or non-state intervention (Hausermann and Schwander 2009,
13). There is one question in the survey that directly tests this claim, asking respondents if benefits should be
proportional to contributions. I find no difference in the preferences of outsiders compared to that of insiders.
9
between insiders and outsiders that would buttress outsiders’ support for the left. If Rueda is
right that center-left socio-democratic parties mainly serve the interests of insiders then one
might expect outsiders to either vote more for anti-establishment parties (the extreme-left or
extremist parties in general) or to express low commitment to any political party and to politics
in general.
Regarding partisanship I will thus test the following hypotheses:
• H 3 :“Outsiders show a higher propensity than insiders to vote for conservative parties."
• H 4 :“Outsiders are over-represented among extreme-left voters and supporters of extremist parties in general."
• H 5 : “Outsiders are over-represented among ‘apolitical’ voters, defined as those who do
not express any partisanship preference."
Outsiders could also abstain from politics all together. This could not only be because of
a lack of representativity of existing parties but also because of the social exclusion that affects
outsiders as a result of their loose connection to a stable occupation. Sociologists have documented how inclusion in a stable work place provides individuals with resources that buttress
political thinking and activities (Paugam 2000; Castel 1995; Svallfors 2007). Among those are
political discussions, collective norms of participation and financial resources. Recently, political scientists have built on this line of research. Iversen, Abrams and Soskice (2010) argue that
an individual’s involvement in informal networks, especially those existing at the workplace,
provides him with important incentives for turnout. Individuals excluded from such networks
on the other hand, are not exposed to the same set of pay-offs and retribution and show-up
less at the voting booth.
Previous research has already linked unemployment to low levels of political participation (Schlozman and Verba 1979). Paugam (1991) looks more specifically at working outsiders.
He analyses individual experience in the work place focusing on satisfaction with one’s work
and stability of one’s job position. He argues that the coexistence of dissatisfaction and instability is comparable in its consequences to the processes of social disqualification experienced
by long term unemployed individuals and individuals on welfare. This paper will thus test the
following hypothesis:
• H 6 : “Outsiders will show, relative to insiders, lower levels of political participation, e.g.
lower voting turnout."
To sum up, how might a focus on the consequences of labor market dualization cast a
new light on the political dynamics of post-industrial European societies? I test two theories.
The first one, comprising of hypotheses one, two three and four point to a possible polarization
of the employed electorate over labor market policies, redistributive politics and partisanship.
I call it the “diverging interests" thesis. Hypotheses five and six point to the political marginalization of outsiders relative to insiders. I call it the “marginalization" thesis.
10
Researchers, however, have often lost sight of the core intuition in Esping-Anderson’s
examination of insider/outsider dynamics: that of cross-national variations. There are indeed
strong reasons to expect that the political relevance of labor market dualization might be limited to certain countries.9 Labor economists have emphasized cross-national variations in the
adjustment to the macroeconomic shocks of the 1970’s. Some countries have favored rising inequality in the job security component rather than in the wage component of the employment
relationship. Maurin and Postel-Vinay (2005) examine wage and security differences between
different skill groups and find that higher wage gaps are associated with lower security gaps.
“Continental European countries, such as Germany or France, do not tolerate wage inequalities to the same extent as the United Kingdom or Ireland; yet they do tolerate much more substantial inequalities in job security. Mediterranean countries, such as Italy or Greece, do not
accept wage inequalities as larger as Germany and France but do accept still larger job security
inequalities" (Maurin and Postel-Vinay 2005: 24). These findings resonate with DiPrete et al.
(2006)’s own findings in comparing France and the US. In this account, the insider/outsider
model might not apply to anglo-saxon economies.10
Iversen and Soskice (2009) similarly emphasizes cross-country variations. They focus
on the extent to which states “has responded to (labor market) developments by providing
compensation and new opportunities for those who have been most affected by these same
development." While the needs of the “losers" of de-industrialization have been met in some
countries", in others " insider-outsider divisions have been allowed to grow deeper." This is
the case of conservative welfare states like Germany or France. In Scandinavian countries, on
the other hand, “governments have compensated losers to a considerable extent through increased transfers and active labor market policies". In Anglo-saxon countries,“rising [wage]
inequality" they argue, “has been exacerbated by complete deregulation of labor and product
markets" extending job insecurity to a much larger share of the population than in Continental
welfare states.
I consequently expect differences between insiders and outsiders to vary cross-nationally.
This is why, when possible, I will allow for the effect of labor market status to vary by country. I
expect the following to be true:
• H 6 : “ Only in a few countries with highly dualizing labor market legislation and contributionbased social benefits will the differential between insiders and outsiders’ preferences be
politically meaningful."
9 Existing
literature often pools survey data and measure an average effect disconnected from any “real" countrylevel situation (Rueda 2005, 2007; Hausermann and Schwander 2009; Emmenegger 2009).
10 In terms of perceived insecurity however, table 2 shows that differentials are important in Ireland in contradiction
with the above claim. Scandinavian countries also experience high differentials between both groups, pointing
to these countries as potential candidate for insider/outsider conflict.
11
3 Empirical strategy
To test the above hypotheses, I use the ESS survey (see appendix). I assess the potential conflict between insiders and outsiders in two steps. First I examine whether at the aggregate level
(if possible with an analysis by country) insiders and outsiders differ. Following this first descriptive step, I examine whether this difference can be traced to labor market status per se or
to differences in the demographic characteristics of both groups (age, gender, skill and education level income). One possibility, is that age, gender or skill levels might have an impact on
political preferences and behavior because of their correlation with insider or outsider status.
Does labor market status have an independent effect? How does it interact with basic socioeconomic predictors? If it does have such effect, could the known positive impact of skill-level,
gender and age on redistributive preferences be due to these groups’ higher propensity to be
outsiders? More generally, I assess the usefulness of a focus on one’s position on either side of
the insider/outsider divide: does it explain additional variation in behavior? how big is the effect compared to other variables? How much could it potentially matter given the relative size
of each group? Finally, I run when possible a separate analysis for each country. In doing so,
I improve on existing studies that only measure a hypothetical average effect of labor market
status.
3.1 Measuring insider/outsider status
I distinguishing workers in atypical working contracts (i.e not in a = full time/long term contracts) from others. In order to better capture individuals’ full employment biographies,11 I use
a specific question in the ESS survey which asks whether the respondent has experienced more
than three months of unemployment in the past 5 years. This allows me to single out core insiders (full time workers on non-atypical contracts having no experiences of unemployment)
and core outsiders (the opposite).
I then break down the outsider category according to their relationship status, distinguishing between individuals living alone, individuals living with a partner working full-time
and individuals living with a partner either unemployed or working part-time. The ESS does
not, unfortunately, give information on the partner’s labor contract type or previous unemployment experience. However imperfect, I am still able to single out a population that I call
“outsiders living with insiders" (OLI). As I will describe later, most individuals in this category
are women. The household income distribution of this group also closely matches that of insiders. For these workers, the outsider status might be voluntary. In addition, their preferences
and attitudes might be as much influenced by their partner’s experience as by their own. Table
1 summarizes the way individuals were classified.
[Table 1. Method used to classify respondents into labor status categories.]
11 I
only focus on employees currently on the labor market, taking out of the sample stuents, retirees, employers
and self-employed workers.
12
Several groups are more difficult to identify as either full insiders, full outsiders or OLIs.
One group is composed of individuals working in atypical jobs but without any previous experience of unemployment. After taking into account their relationship status, half of the population of this category is re-classified as “outsiders married to insiders." One can hypothesize that
they are individuals for which part-time jobs or fixed term contracts are either chosen or not a
burden because of the job stability of their partner. The other half is either living alone or with
someone also in a “bad" job. I reclassify them as full outsiders. Indeed, the insecurity of their
current employment situation can be thought to be the most compelling formative experience
for their political attitudes and behavior. This might not be the case if most of this group were
composed of young individuals for whom this atypical form of employment could be used as
a stepping stone to access better jobs. This does not seem to be the case as only 32 percent of
these individuals are under the age of 35, indicating that most of them are well into their career.
I thus keep them in the outsider category.
Another ambiguous group is composed of insiders who have experienced unemployment in the past 5 years and are not married to insiders (if so, they are classified as insiders).
Their number is surprisingly small (less than 2 percent of the labor force), precluding any robust statistical analysis of this group’s behavior. One strategy is to run the analysis twice, classifying them either as insider or outsider and observing in which direction the coefficients on
each changes. The next section gives a descriptive overview of these categories of workers and
how they differ across countries.
3.2 Insiders vs Outsiders: an overview
As will be discussed below, most of the existing studies examine divergence between insiders
and outsiders using pooled cross-national data and controlling for country fixed effects. They
measure an average impact of being an insider or an outsider. In this paper, I break down the
analysis by country. Table 2 describes the share of the labor force represented by insiders, outsiders and OLIs in an attempt to measure the numerical clout of each group.12 The estimates
have been computed using the first three waves of the ESS survey correcting for differences in
design and effective population size effects between the three waves (see appendix for more
details on the method).13
[Table 2. Distribution of the labor force by labor market status - Share of each category that
perceive their job as insecure]
Three main comments can be made here: more than half of the work force is in a good
job with no previous experience with unemployment. This is the case for 55 percent of the labor force in the UK, while 70 percent of Swedish employees qualify as insiders. The maximum
of “full" outsiders is reached by Ireland where 30 percent of the labor force is concerned. Outsiders are also evenly split between those living alone or with another outsider and those living
12 Ambiguous
13 Samples
insiders have here been classified as full insiders.
sizes range from 1400 for Greece to 4100 for Germany, most sample size are in the [2500 − 3000] range.
13
with insiders, highlighting the need to take relationship status into account for this analysis.
In wave 2 of the ESS survey, respondents were asked the following question “How true
are the following statements about your current job? My job is secure." Respondents currently
holding a job could answer using four categories: “not at all true’, “a little true" “quite true" and
“very true". If respondents chose one of the two latter answers, I coded them as perceiving
their job as insecure. Is there a differential in perceived job security between insiders and outsiders? Does it vary by country? Six countries stand out where outsiders and OLI perceived their
job as much more insecure than insiders do. The difference is both meaningful (in the range
of 20 or more percentage points) and statistically significant. These countries are Germany,
Spain, Finland, Ireland, Norway, Portugal and Sweden. The other countries show no significant difference between the two groups (for these countries, standard errors are not reported).
In Austria, Belgium, Great Britain, and the Netherlands, about a third of the labor force, either
insiders or outsiders consider their job to be insecure. Feeling of insecurity seem particularly
low in Switzerland and high in Greece for all the groups under consideration. (see table 2)
I will illustrate the implications of these empirical results comparing two workers in two
different countries: Sweden and Great Britain. In Sweden, while only one in five insider considers his job as being insecure this is the case for nearly half of outsiders. Does that mean that the
other half of outsiders that consider their job secure should be classified as insiders? Not necessarily. The job security question might not be directly getting at the insecurity that comes with
having a fixed term contract: this job is indeed secure until its due date! In addition, one might
be in a stable part-time job and longing for a full-time one. Outsiders in fixed-term contracts
might still perceive their situation as insecure, even if their do not see the job himself as being
so, because, for instance, of the lack of social protection that goes with their labor contract.14
If one assumes that the job security question does capture the differential in stability between
insiders and outsiders, then one would expect these groups to express different policy preferences. In the British case, being an insider does not seem to come with a relative increase in job
security for instance. One might thus expect the insider/outsider difference to be less relevant
to politics in the UK than in Sweden. There are thus signs that cross-national variations might
matter.
Outsiders have often been described as being mostly low-skills young individuals with
an over-representation of women. When looking at outsiders as a whole without discriminating by relationship status, this is definitely the case. However, women are mainly overrepresented among OLIs. On average they represent 80 percent of the group, ranging from
70 percent for Finland to 90 percent for the Netherlands. Full outsiders are more evenly split
between both genders with the exception of a slight bias in favor of women for Sweden, the
UK, Finland and Portugal. There is a clear over-representation of women in Switzerland where
only 40 percent of full outsiders are men. Interestingly, women are under-represented in this
category for Greece and Spain.
14 Though
this would not be the case for Sweden in particular because of the way its pension system is funded,
social benefits are less tied to previous contributions for instance
14
Regarding age, it is not that obvious that young workers constitute the largest share of
outsiders. The median is between 35 and 45 and 40 percent of outsiders are over 40. Two exceptions are Spain and Greece where outsiders are mostly below 35 years old.
Education also reveals important cross-national variations. In the UK, while 50 percent
of insiders have studied beyond high school, 50 percent of outsiders have never graduated from
high school. In Spain, Greece and Portugal there is no obvious difference in the educational
level of insiders and outsiders. In Germany, while 40 percent of insiders go beyond high school,
only 24 percent of outsiders do. In Norway the difference is smaller but still important: 53 percent and 34 percent respectively.
I attempt to measure skill levels by recoding occupations into two category, skilled and
unskilled. Skilled workers are individuals classified either as “higher and lower managers /
professionals", “higher supervisory / technicians" and “intermediate occupations". Unskilled
workers are those that have been classified as either “lower supervisors and technicians", “lower
sales and service", “lower technical" or “routine". If I run a simple regression measuring the
probability of becoming an outsider if one is skilled v.s. unskilled (controlling for gender and
age) I find important variation by country. In the UK, the predicted probability for an unskilled
male of 40 years old of being an outsider is 44 percent, while it is only of 23 percent for a skilled
worker. In Norway, the probabilities are 25 and 13 percent respectively and in the Netherlands,
28 percent and 17 percent.
The income variable in the ESS provides a very coarse measure of differences in household income. It classifies respondents on a 1 to 12 scale according to their self-declared household earnings. Taking the mean of the income values for each group, one first element stands
out: full Insiders and OLI do not differ much on average. A box plot graph also reveals that
they have a similar distribution along the income scale as shown here for Germany in figure 2.
However, as shown for the UK on figure 1, there is a big variance in each group. There are thus
significant overlaps, i.e. individuals with similar levels of household income whom belong on
different sides of the insider/outsider divide.
[Figures 1 and 2. Distribution of income by labor market status : Germany and the UK]
Insider and outsiders are thus umbrella categories that cover a diverse range of socioeconomic groups. In countries such as Spain, there seems to be a large section of individuals
that faces what Rehm (2008) calls “cross-pressures" 15 meaning that one’s membership in the
15 Rehm
argues, when looking at the US, that partisanship is “not only shaped by the traditionally suggested socioeconomic factors, but also by the uncertainty of future income" (risk exposure). This implies that “rich individuals facing a high degree of risk exposure (or poor people facing low risk exposure) are “cross-pressured":
while their income suggests that they should identify with the Republican Party, their risk exposure makes them
sympathize with the Democrats." However, these two traits became increasingly overlapping over the last four
decades. “Those with lower income tend to be also those with higher risk exposure (risk inequality increased)."
This, Rehm argues, led to a dramatic sorting of the American electorate: more and more citizens became ‘natu-
15
high/low income category or the high/low education category does not correlate with one’s secure or insecure labor market status. In a country like the UK, on the other hand, they appear
to correlate more. Scandinavian countries and continental welfare states are somewhere in the
middle. If being an outsider as an independent effect, then countries where income and labor
status correlate more have potentially high differences between the preferences and political
behaviors of each group. If most of the effect of being an outsider can in fact be explained by
income and other socio-demographic characteristics of the group then countries with lower
correlation will experience fewer differences between both groups.
How different are insiders from insiders when it comes to politics? In the next two sections I test the “diverging" and marginalization thesis, allowing for cross-national variations in
the size of the effects.
4 The effects of insider and outsider status on policy preferences: a
new cleavage?
First, I examine differences between insiders and outsiders in terms of policy preferences (H1
- H2) and then vote (H3-H4-H5).
4.1 Policy preferences
In order to measure preferences for policies that directly serve outsiders’ needs, I use the following two questions provided in wave 4 of the ESS survey: “How much responsibility do you
think governments should have to ensure reasonable standard of living for the unemployed?"
Respondents answer using an eleven points scale ranging from 0 “should not be the government’s responsibility at all" to 10 “should be entirely the government’s responsibility." The second question asks the following: “How much responsibility do you think governments should
have in ensuring a job for everyone who wants one?" The same 0-10 scale was provided to
respondents. I then added the scores for the two variables to create a general “pro-outsider
policy" index. Measure of reliability for this simple index are for the most part acceptable. Exceptions are the Netherlands, Belgium and Switzerland where the Cronbach’s alpha measure is
a low 0.50.
To measure general redistribution preferences, I use a common question in the literature: it asks respondents whether they agree or disagree16 with the following statement: “government should reduce differences in income levels."
The sample size does not allow me to break the analysis down by country. I use an ordinal logit model to measure the average differences in responses between insiders and outsiders, controlling for country fixed effects. I provide the reader with predicted values to assess
the scale of the potential differences between insiders and outsiders. The predicted values are
ral’ partisans. This literature points to a possible return of “pure" class politics.
agree", “agree", “neither agree nor disagree", “disagree", “strongly disagree".
16 “strongly
16
the probability that one will score 16 or more (out of 20) for the pro-outsider index and whether
one will either disagree or strongly disagree regarding government intervention in the reduction of income levels.
[Table 3. Coefficients from a ordinal logit regression of policy preferences over labor market
status]
This first analysis reveals differences between what I call “full outsiders" and OLIs. The
latter seem to behave more like insiders than outsiders.
I control for basic characteristics that could interfere with the results. Insiders often
work in the public sector and are more unionized than outsiders. These are characteristics that
are positively related to support for publicly funded social insurance, government intervention
and redistribution. I also control for education and skill level, in addition to one’s immigrant
background, one’s age, gender and income, which are also correlated with outsider status and
impact policy preferences.
[Table 4. Coefficients from a ordinal logit regression of pro-outsider policy preferences over
labor market status and other demographic variables]
In comparing model (2) - without labor market status - and model (3) - with labor market
status -, it appears that socio-demographic variables that have a strong impact on preferences
have such an effect independently from one’s position as an insider or an outsider.17 OLIs are
different from insiders but only to the extent that the gender composition of each group is very
different. Once I control for gender, OLIs do behave like insiders - see model (3) and model
(4) - . However, women do not support pro-outsider policies more because of their outsider
status as a comparison between model (2) and model (3) shows. Full outsiders seem to differ
from insiders partly because they have less earnings that insiders - see model (5) and model
(3) - . More generally speaking, adding the labor market status does not really explain more
of the variation in the data. The AIC statistics18 barely increases when moving from model (2)
to model (3). This is most probably due to the important variance left to explain among the
biggest group in the sample, i.e. insiders.
Regarding general redistribution preferences, OLIs and full outsiders show less divergence. However, the effect is cut by more than half when controlling for income and gender.
Again, labor market status and job insecurity does not seem to be a central mechanism explaining the relationship between basic socio-demographic characteristics and redistributive
preferences - see model (2) and (3) - . The mediating part played by income also points to the
potentials role of income transfers for containing the effect of labor market status.
17 Exceptions
18 which
are membership in a union and education level which both lose their significance.
corrects for the number of parameters in the model
17
[Table 5. Coefficients from a ordinal logit regression of redistributive preferences over labor
market status and other demographic variables]
Overall, there seems to be an independent effect of labor market status on redistribution preferences with outsiders being more supportive of redistribution, especially when it is
in favor of outsiders. In this case, the effect is, in relative terms, as important as gender or skill
level, confirming H 2 . However, this effect is mitigated by the fact that it does not systematically
extend to OLIs. In addition, the insider/outsider framework is far from providing an encompassing account of the impact of labor market status on preferences. Could this vary by country
according to H 6 ?
One solution to sample size issues is to interact country fixed effect with labor market
status. In the case of pro-outsider policies, I create an interaction term that captures country
or origin and labor market status as a full outsider. In the case of redistribution preferences,
following the finding that relationship status matters less for this more general measure of redistribution preferences, I consolidate OLIs and FOs into one umbrella outsider group. Sample
size also precludes controlling for basic demographic variables. Results are here merely indicative.
[Table 6. Effect of being a Full Outsider on pro-outsider policies - Effect of being an Outsider
(FO + OLI) on redistributive preferences.]
Because of overlapping confidence, one cannot conclude that all countries systematically differ from one another. Certain cases however do stand out. Scandinavian countries
such as Sweden or Norway seem less concerned by a potential tension between insiders and
outsiders. Finland is close to including 0 in its 95 percent confidence interval. Denmark, pioneer of flexicurity, seems however to be harboring a potential conflict. Portugal and Greece
do not show any signs of the latter while Spain does but to a much lesser extent than Germany
(differences are here statistically significant). Germany, following Esping-Anderson’s prediction seem to be bearing signs of potentially important differences between the two groups19 .
There is not specific question regarding one’s concern about job legislation. The existing literature (Emmenegger 2009; Rueda 2007) tries to get at it by looking at how important it is
for workers when choosing their job that their job is secure (over wage level, self development,
though asked in separate questions). Though this question most probably does not capture actual policy preferences, I examine it in more detail not only to address the existing debate in the
literature but also because it might capture insiders’ intensity toward labor market protection.
I thus use the following question: “how important is this characteristic when looking for a job:
the job is secure" and recode people who say important, very important as concerned about
job security (1) and protective labor market legislation and individuals who say "not important
at all", "not important" and "neither important nor unimportant" as less concerned about job
19 Because
of lack of data I cannot extend the analysis to Austria, see footnote 1.
18
security (0). The basic hypothesis to test is wether outsiders, relative to insiders, are less concerned about job security when choosing a job, this because insiders are very concerned about
this issue.
Without introducing any control I find the following small differences between insiders
and outsiders in the predicted probabilities that one will be concerned about job security.
[Table 7. Coefficients from a logit regression of importance of job security over labor market
status.]
However, when I allow the coefficients to vary by country like I did for redistribution
preferences in table 6, half of the countries show small or no effects. Only Great Britain, the
Netherlands, Greece, Germany and Norway show signs that insiders might be more concerned
with job security than outsiders.20 In Ireland on the other hand, outsiders find job security
more important. Other countries have much smaller coefficients21 and the available data does
not allow us to conclude that this effect might not be random. Because of the inadequacy of
this question for capturing individual preferences for employment protection, I limit the analysis to this brief overview.
In the next part, I examine whether differences over redistribution translate into differences in partisanship. Following the above results one would expect no correlation between
partisanship and labor market status to the exception of certain countries such as Germany or
Denmark. However, one wonders whether preferences are different enough to impact relevant
political behavior.
4.2 Partisanship
First, do outsiders vote more for the left? I here run the analysis by country as I am able to use
three waves of the ESS survey.22 . I use a question that asks respondents to situate themselves
on a 0 to 10 scale that runs from right to left.
I do not find any effect of labor market status on partisanship once controlling for age,
education level and income, and this, whatever the country under examination. I also run the
analysis first including basic demographic variables and then controlling for labor market status. As above, the latter does not explain much: young, higher educated and lower level income
individuals do vote more for the left, but not because of their labor market status.
However, in Rueda’s model, this is to be expected, as outsiders feel abandoned by the left
and have no reason to support it more than outsiders (to the contrary, they should show less
support). They might vote more for extremist parties (either the extreme left or any extremist
20 Coefficients
are at least −0.5 and are significant to the 95 percent level or better.
0 and −0.2
22 see appendix
21 Between
19
party from both sides of the political spectrum). I define support for anti-establishment parties as anyone scoring below 4 or above 7 on the left-right scale. With or without controls, labor
market status has not impact on this measure of “extremist vote".
To sum up, there is evidence in favor of a conflict structure between insiders and outsiders but it is limited to a few countries with Germany standing out as the most likely case.
Indeed, in this country, outsiders feel relatively more insecure than insiders, their support for
pro-outsider redistribution is high relative to that of insiders and there are signs that insiders
might be specifically concerned with job security (at the expense of outsiders). It is the only
country that offers such a complete palette of indices in favor of this model. In Spain, while
there are tensions around a redistributive conflict in favor of outsiders, outsiders do not differ
from insiders in the importance they give to job security. For other countries, it is difficult to
conclude. The evidence suggests that this cross-national variation is traceable to specific labor
market policies and institutions that either enhance or mitigate the effects of labor market status. However, there ares no signs that these differences are impacting partisan preferences.
The next section tests what I have called the marginalization thesis, namely the claim
that labor market dualization is resulting in the political exclusion of outsiders. This could explain why even in the most likely cases, there are no signs of it directly impacting partisanship.
5 The impact of labor market status on political participation
I test this thesis by examining the effect of labor market status on voter turnout. I also construct
other measures of political apathy and examine how labor market status affects it.
5.1 Voter turnout
A first overview of turnout rates seem to support the claim that outsiders are politically marginalized compared to insiders.
[Table 8. Turnout rates by labor market status.]
There is a 10 percentage point average difference between insiders and full outsiders.
This difference rises to 20 percent when comparing insiders and unemployed workers (not
shown). Again, OLI behave like their partners, showing little similarities with other outsiders.
How many of these differences in turnout are due to the socio-economic characteristics of each group? I control for known demographic and socio-economic characteristics that
are strongly correlated with both one’s position on the labor market and turnout, namely age,
income, educational and skill levels. I then control for “inclusion" using one’s immigrant background and one’s membership in a trade union as a proxy. Because I aggregate three successive
ESS waves, I am able to run the analysis by country. The results, again, vary cross-nationally.
20
One can single out two categories of countries. In the first group of countries, there is
no independent effect of labor market status on turnout. Being an outsider does not have an
impact independent from the fact that one is in a category with low resources for participation. These countries are : Spain, Greece, Ireland, the Netherlands, the UK and Norway. In the
second group of countries, one can witness a strong independent effect of labor market status.
There is, on average, a 10 percentage point difference in the predicted turnout of insiders and
outsiders for these countries. These countries are Austria, Germany, Portugal, Denmark, Finland, Sweden, Belgium and Switzerland.
I pick two cases from each group to illustrate my point, namely Austria (group 2) and
Great Britain (group 1).
[Table 9. Coefficients from a logit regression of turnout over labor market status and other
demographic variables - AUSTRIA - .]
[Table 10.Coefficients from a logit regression of turnout over labor market status and other
demographic variables - GREAT BRITAIN- .]
The fact that the effect of labor market status on turnout is not limited to my two main
suspects, Spain and Germany (Spain shows actually no impact on turnout), undermines the
claim that this lower level political participation could be due to outsiders’ conscious recognition that their needs are not met by existing parties. It might be more a consequence of network
effects resulting from one’s lower degree of inclusion in the labor market. The behavior of what
I called earlier “ambiguous insiders"23 also favors this hypothesis. Previous experience with unemployment draws these individuals closer to outsiders in their attitudes towards pro-outsider
policies.24 However, when it comes to voting, their turnout is similar to that of insiders.25 If
there is some form of marginalization going on, it does not seem to be because of disenchantment with party politics.
5.2 Political apathy
I use several measures of political apathy. Several questions directly tackle attitudes to politics. One asks respondents whether they find politics too complicated, another asks them how
interested they are in politics and finally how close they feel to a political party. In addition, I
code as “apathetic", individuals who have chose to answer either “neither left nor right" or “do
not know" to the right-left scale question mentioned earlier.
As with partisanship, while cross-tabulations reveal differences between both groups,
adding controls, I do not find an independent impact of being an outsider on any of these
variables, relative to insiders.
23 The
“???" category in table 1.
I run the same model, including them in the outsider category for conservative countries, the coefficient
on outsider increases.
25 When I run the same model, including them in the outsider category for conservative countries, the coefficient
on outsider decreases.
24 When
21
6 Can the insider/outsider framework explain political change?
From Cross-sectional to Longitudinal Analysis (tentative section)
[This is a very tentative analysis but provides a nice complement to the paper by Hanna Schwander and Philip Manow. The data is slightly different from the one previously used, namely I did
not have time to run multiple imputations, regressions thus rely on listwise deletion]
Germany stands out in this analysis as a country with a sizeable outsider population
with preferences distinct from that of labor market insiders. Germany is also a country where
support for government funded redistribution has increased since 2002. Figure 3 plots disagreement (lower values indicate agreement) with the claim that government should reduce
income differences for all countries in the ESS between 2002 and 2012. Germany clearly stands
out as the only country in the sample where support for redistribution has increased over time.
The change in the mean over this decade is equal to half a standard deviation of the pooled answers to this item. While 15 percent chose the “strongly agree" answer in 2002, the percentage
had doubled by 2012. While 25 percent disagreed with the claim that the government should
redistribute income in 2002, they were only 11 percent disagreeing in 2012.
[Figure 3. Changes in support for redistribution in a comparative perspective .]
Can I trace this increase in demand for redistribution back to labor market outsiders? At
the aggregate level, the trend is clear, compared to 2012, the coefficient of support for redistribution among outsiders relative to insiders has decreased by close to 70 percent (not shown).
While there is sign of this decline starting in 2006, the bulk happens in 2008 and 2012 indicating a potential “Recession" effect. To the extent that Germany was one of the countries without
high levels of unemployment, this timing it itself a puzzle, especially when compared to trends
in other countries (though I will not examine this issue here, I do find evidence that recent unemployment is a better predictor during the recession than in previous years ). My hunch is
that Germany’s (relative) economic health has encouraged unions to ask for wage increases,
politicizing the issue of “fair" redistribution and shifting average support accordingly.
I examine trends in the East and the West separately and find no evidence that this is
driven by individuals living in East Germany. To the contrary, the evidence points to a catch up
with individuals in West Germany shifting at a faster rate.
The major trend in the data relates to the relationship between the income variable and
support for redistribution. Income becomes much more predictive in 2004 and stays so in 2006
and 2010 (the income category changes in 2012 requiring additional recoding that I did not
have time to do). This effect is most sizable among individuals who identify with the SPD, the
extreme left or the Green. Figure 4 plots the relationship between income and preferences in
2002, 04, 06, 08 and 2010. I have interacted a year fixed effect with the income variable squared
to allow for the shape of the relation to change in a non-linear way over time. For all years,
except 2004, I have controlled for interest in politics (see Zaller (1992)), age, gender and recent
22
experiences with unemployment.
The effect is largest in 2006 and 2008. My guess is that the Great Recession then muddles
the results (e.g. the intercept for 2010 is much smaller, i.e the average is more pro-redistribution
that year). In all years, except 2004, the interaction between income squared and the year
dummy is significant. Thanks to the use of a squared term we can see that the major increase in
the slope of the income coefficient comes from an increase in support for redistribution among
lower income groups. This relationship is half the size if I run the analysis on the full sample. I
find no significant change in the income slope if I only take respondents whom do not identify
with a left-wing party.
[Figure 4. Change in the relationship between income and support for redistribution among
respondents who associate with a left-wing party]
What explains this pattern? There is not evidence that difference in job security as proxied by one’s labor status is driving the results. It could be leftist voters disappointed by the Hartz
IV reforms. However, this relationship is (highly) robust to including a measure (also interacted
with year dummies) of subjective ideology. If I control for the full gamut of measures of risk exposure combined to create my insider/outsider categories, the effect of income in 2006 and
2008 becomes even stronger. My current working hypothesis is that, potentially driving this is
an interaction between stagnating wages and the rise of the radical left. The Hartz IV reforms
and the subsequent shift to the center of the SPD on economic issues opened a window for
the radical left to step in and gain votes. This also increased low-income voters’ exposure to a
“leftist" redistributive discourse. In other words, the rise of the radical left (who won representation in parliament in 2005) created a discursive context conducive to individuals in low and
stagnating income categories embracing a pro-redistribution discourse.26
7 Conclusion
The increase in employment insecurity and its concentration among specific social groups has
attracted much attention among social scientists. Researchers however, differ in their conceptualization and understanding of this general trend. Some examine how this risk is distributed
in the population. Others have focused on the politics of labor market segmentation, namely
on the institutional and legal bases for this segmentation. New legislation has created, alongside long-term highly protected labor contracts, short-term contracts with fewer social rights
attached to them (lower or absent retirement benefits, lower unemployment and severance
benefits). The entrenchment of dualization in labor contract legislation has been traced back
to intense political bargaining and compromise between major stakeholders trying to adapt to
26 All
this is speculative of course but in a similar analysis of left-right orientation in the UK (where no similar
radical left party could enter the political arena) I find no such evidence of an attitudinal shift to the left among
the population in general or low income groups in particular.
23
international economic changes (Palier and Thelen 2010). I have argued that this latter literature makes an innovative use of the insider/outsider dichotomy developed by labor economists
and generates very clear predictions about existing attitudinal differences and a potential political cleavage. I understand the former literature to be more generally interested in risk exposure, beyond the specific role of labor market regulation.
This paper intended to provide a first assessment of the potential for such cleavage to
become politically relevant. Overall, outsiders do not constitute a large share of the labor force
(especially once one’s partner’s status is taken into account) and national institutions and policy have often successfully mitigated the difference in many countries. When differences across
groups do exist, they are too small to really impact the political system. To the contrary, the
negative impact of outsider status on turnout in some countries, makes such translation into
politics even less likely.
Though I lack a country-specific analysis regarding redistribution preferences, it seems
that in countries with generous employment benefits such as Norway or Sweden, and countries
with little dualization inducing labor legisation like the UK27 labor market status does not have
any additional explanatory power. Of concern are countries where these policies enhance the
effect of dualization such as in Germany, Austria and maybe France (Palier and Thelen 2010)28
.
However, even in a most likely case like Germany, I find little evidence that individuals
with atypical work biographies are developing policy preferences antithetical to that of individuals in stable job relations. Income and skill-level trump any potential diverging interests that
might stem from one’s (lack of) access secure and stable employment relations. Over time, I
find that low income insiders are converging toward low income outsiders, indicating that one’s
general bargaining power on the labor market (as proxied by income level) is more important
that one’s access to a stable job. In other words economic changes in post-industrial countries
can be easily interpreted using existing models that emphasize material interest as directly derived from one’s ownership of valuable skills. The major insight of the insider/outsider model
was to emphasizes the role of regulations and institutions in distributing risks independently
of one’s economic bargaining power. I find little evidence to support the claim that insiders
and outsiders might differ in their preferred policies. The French protests against temporary
contracts are to be understood less as an attack against the privileges of insiders and more as a
demand for them to be extended to the entire labor force.
27 where
the employment protection is as low for insiders as it is outsiders.
this country unfortunately did not make it into the sample because of missing variables.
28 thought
24
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Appendix
European Social Science Survey: wave 1, 2, 3 and 4
The ESS survey is “an academically-driven social survey designed to chart and explain the interaction between Europe’s changing institutions and the attitudes, beliefs and behaviour patterns of its diverse populations" (home page presentation : http://www.europeansocialsurvey.org/).
In contrast to other widely used cross-national survey like the World Value Survey, ESS is especially rigorous in its methodology. The survey developers provide a large documentation explaining how weights were computed. In the cross-national datasets, individual weights are
assigned to each respondents. However, the researcher can still also access country specific
datasets that include more details on stratification. I ran a few tests to compare results using
the cross-national and the country specific dataset and did not find any difference.
As emphasized by the designers of the survey, the ESS is aimed at facilitating comparisons between individual countries, it is thus less appropriate for combining data for groups of
country. The survey team provides population weight that allow such combination but margins of error in such case are much higher. I tried to avoid the latter when possible. However,
none of the weights provided correct for non-response in the sample.
27
Overview of the insider and outsider population by country: method
In order to produce table 1, I combined for each country three waves of the ESS survey (1-3).
Because of changes in the design and in the effective sample size, aggregation of the data over
the three waves is not possible. I thus computed the estimator and their standard errors, one
wave at a time, each country separately and then combined the estimators and their standard
errors. I did so following a formula provided by the ESS survey team (http://ess.nsd.uib.no/ess/cumulative).
I assume that over the 2001-2006 period during which the 3 waves of data were collected, the
population from which the sampling occurred did not change.
Missing data was imputed using Amelia in R (King 2002; Honaker et al. 2003). Computation on the five imputed datasets were performed in Stata using the mi estimate program
available in Stata11. Simulations were computed using the Clarify package (King, Tomz and
Wittenberg 2000; Tomz, Wittenberg and King 2003)).
Control variables
28
29
Immigrant bckg
Union mber
Unskilled worker
Public sector
Controls variables
Coded 1 if female, 0 if male
Recoded into 6 categories: 18-25, 25-35, 35-45, 45-55, 55-65, 65 +
For wave 1-3, income is coded as a 12 categories variable. All countries share the same scale.
Starting at wave 4, categories were adapted to reflect the median income of the country,
thus using a different scale for each country.I kept the categories for wave 4 analysis but for the other waves
I recoded income attributing to each category the center value of the income bracket that goes with it.
I then took the log of the resulting values
0 - 6 scale with 0 = “Not conpleted primary education", 1 = “Primary",
2 = “Lower secondary", 3 = “Upper secondary", 4 = “Post-secondary, non-tertiray",
5 = “First stage of tertiary", 6 = “Second-stage of tertiary".
Coded 1 if respondents is classified as having held (if unemployed)
or holding a job in the public sector
Coded 1 if respondent is born abroad or to one or both parents born abroad
Coded 1 if member of a trade union
Using (Rose and Harrison 2007), I rely on the ISCO-88 to divide workers in six general occupation
categories: “Large employers, higher mgrs/professionals", “Lower mgrs/professionals",
“higher supervisory/technicians", “Intermediate occupations", “Lower supervisors and technicians",
“Lower sales and service", “Lower technical", “Routine". I consider the latter 3 categories
as unskilled and the others as skilled.
Female
Age
Income
Education level
Comments
Variable
Tables and Figures
30
31
Insider
Insider
(Full) Outsider
? → Outsider living
Insider
? → (Full) Outsider
(Full) Outsider
Unemployed
Part-Time and/or
Fixed Term
job contract
?
Insider
Full-time and
Permanent
job contract
Table 1: Method used to classify respondents into labor status categories
Living with partner
working full-time
Living alone or with
with partner working part-time
Full-time and
Permanent
job contract
No recent experience
with unemployment
Outsider living
Insider
Outsider
Part-Time and/or
Fixed Term
job contract
More than 3 months
of unemployment in
the last 5 years
(Full) Outsider
(Full) Outsider
Unemployed
Country
Austria
Belgium
Switzerland
Germany
Denmark
Spain
Finland
Great Britain
Greece
Irland
Netherlands
Norway
Portugal
Sweden
Labor market
status
Share of the
labor force
SE
Share with
insecure jobs
SE
Insider
OLI
Outsider
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
0.62
0.19
0.19
0.62
0.18
0.19
0.65
0.19
0.16
0.62
0.16
0.22
0.68
0.17
0.15
0.57
0.16
0.28
0.69
0.14
0.16
0.55
0.21
0.23
0.51
0.19
0.29
0.49
0.23
0.28
0.58
0.24
0.18
0.68
0.17
0.14
0.55
0.22
0.23
0.70
0.15
0.15
0.0087
0.0071
0.0069
0.0088
0.0071
0.0072
0.0091
0.0076
0.0070
0.0074
0.0056
0.0062
0.0088
0.0072
0.0067
0.0095
0.0069
0.0086
0.0079
0.0060
0.0063
0.0092
0.0077
0.0078
0.0113
0.0091
0.0106
0.0093
0.0079
0.0087
0.0096
0.0084
0.0074
0.0079
0.0064
0.0060
0.0105
0.0088
0.0090
0.0075
0.0059
0.0057
0.26
0.31
0.33
21
0.30
0.29
0.16
0.15
0.13
0.38
0.45
0.53
0.28
0.32
0.38
0.24
0.55
0.57
0.16
0.47
0.44
0.26
0.27
0.32
43
0.53
0.49
0.17
0.34
0.32
0.31
0.27
0.36
0.20
0.31
0.31
0.35
0.63
0.55
0.23
0.43
0.46
0.018
0.047
0.043
0.019
0.069
0.040
0.014
0.059
0.047
0.023
0.046
0.042
0.015
0.042
0.045
0.025
0.062
0.055
0.015
0.048
0.049
Table 2: Distribution of the labor force by labor market status
32
Figure 1: Distribution of income by labor market satus - UK
33
Figure 2: Distribution of income by labor market satus - Germany
34
35
All Outsiders
OLI
Full Outsider
0.35
0.21
0.43
0.050
0.064
0.062
24
20
26
18
18 †
18
- 0.40
-0.35
-0.43
Estimate
0.0525
0.069
0.063
Table 3: Coefficients from a ordinal logit regression of policy preferences over labor market status
14
15
14
20
20
20
Redistribution preferences
SE
Predicted Values
Outsider
Insider
(as defined by model)
†Indicates that when plotting the distribution of a thousand simulated quantities of interests
for each labor market status value, the distributions overlap by more than 50 %. See (King, Tomz and Wittenberg 2000)
Simulations were computed using the Clarify package in Stata (Tomz, Wittenberg and King 2003)
In each cases the reference category are Insiders
Model 2
Model 1
Estimate
Pro-outsider policy index
SE
Predicted Values
Outsider
Insider
(as defined by model)
OLI
“Full" Outsiders
Public sector
Union mber
Education level
Unskilled worker
Immigrant bckg
Age
Female
Income
CFE
Sample size
AIC statistic
(1)
(2)
(3)
(4)
(5)
0.21 **
(0.064)
0.43 ***
(0.062)
YES
0.22 ***
(0.040)
0.16***
(0.042)
-0.05**
(0.018)
0.15**
(0.042)
0.06*
(0.024)
0.0
(0.017)
0.21***
(0.035)
-0.08***
(0.010)
YES
0.07
(0.071)
0.28 **
(0.069)
0.18 ***
(0.057)
0.10
(0.061)
-0.02
(0.024)
0.19 **
(0.063)
0.01
(0.035)
-0.02
(0.026)
0.23 ***
(0.055)
-0.07 ***
(0.012)
YES
0.16 *
(0.066)
0.30 ***
(0.069)
0.24 ***
(0.055)
0.08
(0.060)
-0.02
(0.024)
0.16 **
(0.061)
0.01
(0.035)
-0.02
(0.026)
-0.08 ***
(0.012)
YES
0.06
(0.071)
0.38 ***
(0.068)
0.17 **
(0.057)
0.09
(0.061)
-0.05
(0.024)
0.25 ***
(0.061)
0.02
(0.035)
-0.02
(0.026)
0.26 ***
(0.055)
YES
12137
63466
10992
57272
10992
57240
10992
57264
10992
57312
Table 4: Coefficients from a ordinal logit regression of pro-outsider policy preferences over labor market status and other demographic variables
36
OLI
“Full" Outsiders
Public sector
Union mber
Education level
Unskilled woker
Immigrant bckg
Age
Female
Income
CFE
Sample size
AIC statistic
(1)
(2)
(3)
(4)
(5)
- 0.35 ** *
(0.069)
- 0.43 ***
(0.063)
YES
-0.17 **
(0.063)
0.27***
(0.064)
0.07**
(0.026)
- 0.40 ***
(0.066)
0.00
(0.038)
-0.02
(0.027)
-0.25***
(0.055)
0.12***
(0.014)
YES
-0.20 *
(0.079)
-0.15 *
(0.073)
-0.16 *
(0.064)
-0.29 ***
(0.064)
0.07 **
(0.026)
-0.38 ***
(0.066)
0.01
(0.038)
-0.02
(0.028)
-0.21***
(0.059)
0.12 ***
(0.015)
YES
-0.28 ***
(0.074)
-0.17 *
(0.073)
-0.21 **
(0.063)
-0.27 ***
(0.063)
0.07 **
(0.026)
-0.35 * **
(0.066)
0.00
(0.038)
-0.02
(0.028)
0.13 ***
(0.014)
YES
-0.17 *
(0.079)
-0.33 ***
(0.071)
-0.14 *
(0.065)
-0.27***
(0.064)
0.11 ***
(0.026)
-0.48 ***
(0.066)
0.00
(0.037)
-0.02
(0.027)
-0.26 ***
(0.058)
YES
12137
63466
10992
57272
10992
57240
10992
57264
10992
57312
Table 5: Coefficients from a ordinal logit regression of redistributive preferences over labor
market status and other demographic variables
37
Country
DV:pro-outsider
policies
lower bound
Upper bound
DV:income
redistribution
LB
UB
0.20
0.61
0.69
0.54
0.36
0.31
0.41
0.07
0.31
0.13
0.25
0.23
-0.05
0.31
0.44
0.24
0.12
0.07
0.10
-0.20
0.05
-0.14
-0.06
-0.15
0.46
0.92
0.95
0.84
0.59
0.55
0.71
0.35
0.56
0.41
0.56
0.49
-0.55
-0.46
-0.45
-0.37
-0.53
-0.39
-0.31
0.11
-0.41
-0.55
-0.27
-0.28
-0.82
-0.76
-0.67
-0.67
-0.74
-0.65
-0.58
-0.25
-0.68
-0.80
-0.51
-0.52
-0.27
-0.18
-0.23
-0.06
-0.30
-0.12
-0.05
0.28
-0.15
-0.31
-0.03
-0.04
Belgium
Switzerland
germany
Denmark
Spain
Finland
Great Britain
Greece
Netherlands
Norway
Portugal
Sweden
Coefficients computed by fitting an ordinal logit model
and allowing for the coefficients to vary by country using interaction terms
In the case of preference for pro-outsider policies
the effect is measured for being a Full Outsider. In the case of redistributive preferences,
the effect is measured for being an outsider, irrespective of one’s partner status.
Table 6: Effect of being a Full Outsider on pro-outsider policies - Effect of being an Outsider
(FO + OLI) on redistributive preferences.
Model 1
Model 2
All Outsiders
OLI
Full Outsider
Estimate
SE
-0.50
-0.54
-0.47
0.10
0.14
0.12
Predicted Value
Outsider
Insider
(as defined by model)
0.86
0.84
0.85
0.90
0.90
0.90
In all cases, the distributions of simulated values of interests do not overlap.
These simulated values were computed using the Clarify package in Stata
In each cases the reference category are Insiders
Table 7: Coefficients from a logit regression of importance of job security over labor market
status
38
Country
Austria
Belgium
Switzerland
Germany
Denmark
Spain
Finland
Great Britain
Greece
Ireland
Netherlands
Norway
Portugal
Sweden
Labor market
status
Turnout (%)
bound
Lower
bound
Upper
Insider
OLI
Outsider
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
I
OLI
O
86
87
65
94
92
86
66
66
45
85
84
67
92
95
85
83
84
68
82
77
64
71
71
54
93
93
88
81
86
67
86
85
73
88
88
74
79
70
62
91
91
79
85
85
60
94
90
82
63
60
39
85
81
63
93
92
80
81
79
63
77
72
60
68
67
48
91
89
85
78
82
63
85
82
67
87
85
70
76
65
56
90
87
76
88
92
70
96
95
89
68
72
51
87
88
70
96
97
89
85
88
72
64
82
68
72
76
59
95
97
91
84
90
71
88
88
79
89
91
78
82
76
67
92
83
83
Table 8: Turnout rates by labor market status.
39
OLI
“Full" Outsiders
Age
Log Income
Unskilled woker
Education level
Immigrant bckg
Member trade union
Sample size
AIC statistic
(1)
(2)
(3)
(4)
(5)
0.20
(0.182)
-1.22
(0.138)
-
0.04
(0.197)
-0.77
(0.128)
0.64
(0.055)
0.19
(0.067)
-
0.12
(0.205)
-0.71
(0.140)
0.60
(0.057)
0.13
(0.072)
-0.52
(0.121)
0.27
(0.070)
-
0.18
(0.207)
-0.70
(0.141)
0.56
(0.060)
0.11
0.141()
-0.51
(0.122)
0.27
(0.069)
-0.19
(0.075)
0.30
(0.131)
0.63
(0.059)
0.16
(0.068)
-0.53
(0.118))
0.26
(0.071)
-0.21
(0.074)
0.35
(0.129)
3247
-2994
3274
-2794
3157
-2774
3157
-2540
3157
-2564
Table 9: Coefficients from a logit regression of turnout over labor market status and other demographic variables - AUSTRIA -
40
OLI
“Full" Outsiders
Age
Log Income
Unskilled woker
Education level
Immigrant bckg
Member trade union
Sample size
AIC statistic
(1)
(2)
(3)
(4)
(5)
0.053
(0.127)
-0.69 ***
(0.122)
-
-0.12
(0.132)
-0.31 *
(0.123)
0.73 ***
(0.64)
0.24 ***
(0.06)
-
-0.04
(0.134)
-0.21
(0.125)
0.69 ***
(0.066)
0.10
(0.061)
-0.47 ***
(0.106)
0.15 ***
(0.039)
-
-0.02
(0.135)
-0.19
(0.125)
0.70 ***
(0.066)
0.13 *
(0.058)
-0.48 ***
(0.107)
0.14 ***
(0.039)
0.34
(0.065)
0.28 **
(0.100)
0.70 ***
(0.066)
0.13 *
(0.058)
-0.50 ***
(0.105)
0.14 ***
(0.04)
0.03
(0.064)
0.29 **
(0.100)
2946
-3710
2946
-3362
2870
-3204
2870
-3184
2870
-3190
Table 10: Coefficients from a logit regression of turnout over labor market status and other
demographic variables - GREAT BRITAIN-
41
(mean) gincdif_n
3
2.5
2
1.5
3
2.5
2
1.5
3
2.5
2
1.5
3
2.5
2
1.5
3
2.5
2
2000
2005
2010
2015 2000
2005
2010
2015 2000
2005
SE
LU
HR
EE
BG
2010
year
2015 2000
2005
SI
NL
HU
ES
CH
2010
2015 2000
Figure 3: Support for Redistribution in a comparative perspective
RU
PT
GR
GB
IT
DK
DE
IS
BE
AT
Graphs by Country
1.5
42
2005
SK
NO
IE
FI
CY
2010
2015 2000
2005
TR
PL
IL
FR
CZ
2010
2015
2
1
y
0
-1
0
2002
2004
5
x
2006
10
2008
2012
15
Figure 4: Change in the relationship between income and support for redistribution among respondents who associate with a left-wing
party
-2
43