The dualization of social rights in Sweden and beyond: How social policy design can maintain or mitigate income inequality

Research problem and specific questionsBenefit dualization is an increasingly pressing issue in Sweden.

It is the result of inadequate design of out-of-work benefits that disproportionally favors labor market insiders with generous income compensation while disadvantaging outsiders with less or no benefits. This ultimately leads to greater income inequality not only within but also outside of employment.

I want to investigate to what degree social policy fails to mitigate this discrepancy and provide an answer to the question of how income inequality is either mitigated or perpetuated by benefit design, particularly with respect to institutional social rights.Data and methodA novel database that captures social rights for different segments of the labor market by taking group-specific characteristics into account is developed.

The data comprises the level of income replacement, recipiency duration, extent of coverage, and the underlying eligibility and qualification criteria for different out-of-work benefits and tiers as well as their interaction.

The sample covers data for Sweden from 1960–2023 and an additional 17 economically advanced democracies from 1990–2023.

Based on this, I construct a benefit dualization index (BDI) that uniquely captures differences in social rights provision for insiders and outsiders.Societal relevance and utilisationThe project will raise awareness on how progressing segmentation between insiders and outsiders is not just fueled by discrepancies in salaries and wages, but also by social policies.

By analyzing the development and extent to which policies perpetuate or counteract dualization in Sweden and other countries, the project offers insights on how social policy reforms affect outcomes in income inequality.

This approach offers unique insights into best and worst practices, as well as proven strategies for dealing with dualization of benefits.Plan for project realisationThe project stretches across three years and contains two main modules of the same length. The first module is concerned with data gathering and the construction of the BDI.

Within the second module, I analyze the development of benefit dualization in the Swedish case, its mechanism and relationship to labor market dualization, and its consequences for income inequality within a broader sample. The data will be made available through the SPIN database and the DEMSCORE research infrastructure.