Labor Market Dualization and Skills Development

Abstract

Labor market dualization takes the form of employment status, type of contract, employer size and dependent vs. self employment, which shapes the structure of pay and compensation between groups of employees and limits opportunities for labor mobility within the labor market. This research analyzes the structure and dynamics of labor market dualization and investigates how skills development policies interact with labor market dualization, shedding light on the issues of employment as well as skills development. The primary goal of skills development20 policies lies in helping the formation and improvement of citizens' competencies and abilities along their life course. In this respect, employment stabilization through the establishment of lifelong skills development should be regarded as its primary goal, and addressing labor market dualization is a precondition for its achievement. Analyzing empirical data of European countries and of Korea, this research helps to better understand the meaning, boundaries, and dynamics of labor market dualization that have unfolded for the last few decades. To be specific, occupational level analysis has been conducted on 'European Working Conditions Survey' and 'Korean Labor and Income Panel Study', delineating boundaries of labor market dualization based on occupation-based class schemes. Then, differences between insider and outsider groups in terms of income, educational achievement, and non-pecuniary index of job quality have been investigated. This research also emphasizes that institutional configurations of labor markets should be investigated to recognize the interplay between labor market dualization and skills development policies. In recent discussion on the reform of labor market activation and employment protection legislation, interest coordination between insiders and outsiders has emerged as one of key concerns, therefore a deeper understanding of labor market dualization resulting from divergent interests of labor unions and political parties is of high priority. We believe that this research is to serve as a stepping stone for understanding the roles of skills development policies in ameliorating labor market dualization.