This study explores the paradoxical consequences of social welfare reforms in South Korea since the 1997 financial crisis. Despite efforts to implement a comprehensive social insurance system (SIS), the South Korean government did not succeed in providing access to people who qualified for aid. This study examines the dynamics of the implementation of the SIS in relation to the policy domains of labour markets and inter-firm relations, rather than a narrow focus on social welfare policies. This study shows how the implementation of the SIS becomes self-eroding as a result of various actors' exploitation of tensions between the SIS and other institutional domains.

Dualization explains analogous changes in South Korea and Japan like labor market segmentation and the expansion of social protection for nonstandard workers. This study argues, however, that their institutional structures and underlying dynamics of dualization are more different than they appear, where the subcontracting relations between big businesses and their suppliers come into play. The co‐operative interfirm relations in Japan become a buffer with which firms incrementally adjust to a coupled dualization in the labor market and social welfare system. Thus, Japanese nonstandard workers excluded from the social insurance system exist because of the formally segmented structures of labor markets and social welfare programs. By contrast, the exploitative subcontracting relations in South Korea intensify labor market segmentation and undermine government regulation of labor and social welfare, leading to a decoupled dualization. Those in South Korea persist despite the formally inclusive and unified structures of social welfare programs. Related Articles Related Media