Economic Distress, Labor Market Reforms, and Dualism in Japan and Korea

Abstract

This article seeks to examine the rapid rise of labor market dualism and inequality in Japan and Korea. It argues that the path‐dependent trajectories of labor market and social protection reforms biased in favor of labor market insiders explain recent institutional developments in the two countries. In Japan, political coalitions between conservative policymakers, large firms, and core regular workers in reform politics consolidated labor market dualism and inequality during its protracted recession. Meanwhile, the organizational capacity of large chaebol unions deepened the inequality and the segmentation of the dualistic labor market in Korea. By examining three key institutional domains of the labor market—labor market reform, wage bargaining, and social protection—this article analyzes the ways in which Japan and Korea have reinforced dualism and inequality over the past two decades.