Towards a Two-Tier Society?

The labor market has a crucial distribution function in Western welfare societies and is therefore a major source of social conflict. Our main argument is that a two-tier society develops as a consequence of the development of the labor market. Because labor costs increase relative to those of capital, selection devices in the labor market change. Level of education and health become more important, whereas the significance of gender decreases. The social consequences of these selection processes are analyzed as a process of spatial and mental segregation between participants and non-participants in the labor market. The social security system is an especially important new locus of social conflict. We conclude that the neo-liberal solution of reducing social security benefits will have the perverse effect of calling into existence an underclass, which threatens the property rights of the participants.