The dualization of social rights in Sweden and beyond: How the design of social policies perpetuates income inequality

Benefit dualization is one of the most pressing issues in Sweden.

It is the result of inadequate design of out-of-work benefits that favor labor market insiders with generous income compensation while disadvantaging outsiders with less or no benefits. This ultimately leads to greater income disparities not only within but also outside of employment. In this research project, we want to investigate how social policy fails to mitigate this discrepancy.

Specifically, we examine how income inequality is perpetuated by benefit design, particularly with respect to institutional social rights.

The goal of this project is to show how progressing segmentation between insiders and outsiders is fueled by discrepancies in salaries and wages, but also by the design of benefits, which can either offset or deepen already exisiting inequalities.

To test this argument, we construct a benefit dualization index (BDI) that captures differences in degrees of de-commodification for insiders and outsiders and show how it has evolved over the past decades and how it contributes to disparities in disposable incomes.

We develop a novel database that captures social rights for different labor market segments by taking group-specific characteristics into account.

Furthermore, we analyze the extent to which different strategies to address labor market dualization are pursued in Sweden and other countries and how social policy reforms can either exacerbate or mitigate inequalities.