Altered Risks and Changing Divides: Labor Market Inequality during the Great Recession

Since the 1980s, welfare scholars researching European economies have emphasized the growing divide between labor market insiders, who are largely sheltered from unemployment, and labor market outsiders that instead shoulder a disproportionate amount of employment risk. This phenomenon of dualization is been particularly visible in Southern European labor markets, where particularistic links between voter groups and parties as well as institutional legacies have deepened cleavages between insiders and outsiders. And yet, since the onset of the Great Recession, unemployment risks between the two groups seem to be growing more homogenous. Classical insiders, such as men in prime working age employed in manufacturing sectors, have been hard-hit by the crisis and structural reforms introduced in its aftermath. Drawing on a combination of micro-level income data from the cross-national EU-SILC panel and carefully selected case studies, we argue that that the Great Recession has led to an upward convergence of unemployment risks between insiders and outsiders in the Eurozone Periphery. Our findings run contrary to the empirical expectations of the dualization literature and are better explained by theories of labor market precariousness rooted in economic sociology.