The Politics of Employment Insecurity

At the heart of debates about the effects of globalization and the service economy on the welfare state is the notion of employment insecurity. It is considered a key causal mechanism through which cross-border movements of capital, goods and services (globalization) and employment shifts from manufacturing to services (deindustrialization) affect social policy. However, empirical research on such a causal linkage has been markedly lacking. In many cases, employment insecurity has been simply assumed to be the causal mechanism at work behind the observed relationship between economic globalization or deindustrialization and governments' commitment to social protection. This dissertation brings the hidden causal mechanism to the fore by using employment protection both as an explanatory and a dependent variable. Employment protection, which refers to regulatory frameworks that govern hiring and firing, has a direct bearing on workers' job security and can capture the politics of labor market risks. This dissertation consists of two projects. First, it examines how globalization and the service economy affect employment protection. Second, it analyzes how employment protection influences institutions of social protection. Focusing on the preferences and political strength of skilled workers, I argue that the effects of international trade and the service economy on employment protection depend on the relative scarcity of skilled labor and on the patterns of employment shifts between industries. I also contend that whether employment insecurity leads to expanded social protection depends on the social policy preference of skilled workers, which in turn, is shaped by the skill distribution in the economy and by pre-existing social protection institutions. This study finds that employment protection is both a political response to external and internal economic changes and a driving force for social policy change. Moreover, it highlights different causal processes for developed and developing economies. It offers statistical evidence based on two extensive cross-national time-series datasets of employment protection in the OECD and Latin America, and uses a case study of South Korea as qualitative evidence to elucidate the underlying dynamics of its quantitative findings.