Beyond Left and Right: The Politics of Labor Market Policy in Post-industrial Democracies

This paper explores whether partisan differences have influenced recent changes in labor market programs. It argues that political parties have different preferences with respect to labor market policies according to their position in a two-dimensional party competition space: a left-libertarian party prefers activation; a right-libertarian party, workfare; a left-authoritarian party, dualism; and a right-authoritarian party, dualism or workfare. Out of these three strategies, this study hypothesizes that activation supports human capital investment in precarious and irregular workers, workfare incentivizes the inactive to engage in paid employment, and dualism promotes social protection for labor market insiders. Through an analysis of the pooled time-series and cross-section data of 21 OECD countries with error correction models, it reveals that left-libertarian governments increase their spending on empowerment-oriented active labor market programs, while left-authoritarian governments promote the strictness of employment protection legislation for regular employees.