Beyond Full Employment: The Employer of Last Resort as an Institution for Change

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in September 2012The Levy Economics Institute Working Paper Collection presents research in progress by Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals.Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad. ABSTRACTOver the past decade and a half the ability of the employer-of-last-resort (ELR) proposal to deliver full employment and price stability has been discussed at length in the literature. A different issue has received relatively little attention-namely, the concern that even when the ELR produces these macroeconomic benefits, it does so by offering "low-paying" "dead-end" jobs, further denigrating the unemployed. In this context, the important buffer stock feature of the ELR is misconstrued as a hydraulic mechanism that prioritizes macroeconomic stability over the program's benefits to the unemployed.This paper argues that the two objectives are not mutually exclusive by revisiting Argentina's experience with Plan Jefes and its subsequent reform. Plan Jefes is the only direct job creation program in the world specifically modeled after the modern ELR proposal developed in the United States. With respect to macroeconomic stability, the paper reviews how it exhibits some of the key stabilizing features of ELR that have been postulated in the literature, even though it was not designed as an unconditional job guarantee. Plan Jefes also illustrated that public employment programs can have a transformative impact on persistent socioeconomic problems such as poverty and gender disparity. Women-by far the largest group of program beneficiaries-report key benefits to their communities, families, children, and (importantly) themselves from participation in Jefes.Argentina's experience shows that direct job creation programs that offer employment at a base wage can have the unique capacity to empower and undermine prevailing structures that produce and reproduce poverty and gender disparities. Because the latter two problems are multidimensional, the ELR cannot be treated as a panacea, but rather as an important policy t...

Rejuvenating Greece’s labour market to generate more and higher-quality jobs

“…Sources: (OECD, 2019 [117]) (OECD, 2019 [118]) (OECD, 2019 [119]) (Andrews, Nicoletti and Timiliotis, 2018 [120]) (Sorbe et al, 2019 [121]) (Gal et al, 2019[122])…”

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“…During recessions, ELR employment rises as the private sector sheds workers. During economic expansions, ELR employment rolls decline as workers seek employment in the higher wage private sector (Tcherneva, ).…”

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“…First of all, government can create jobs independent of workers' location; hence many jobs can be created in rural areas, improving the conditions of these areas and lowers urban migration. Second, with this program, unemployment will be eliminated by direct job creation, not by boosting aggregate demand (Tcherneva, 2012). Solving the unemployment problem through direct job creation would both be faster and more feasible.…”

“…In this sense, ELR wage can act as a minimum wage. Since ELR program stabilizes wages at the bottom, it also helps stabilize prices (Tcherneva, 2012). Moreover, people who work in the ELR program could gain some useful skills that one can use in their future career (at higher paying private jobs).…”

“…Is it possible for governments to fund all these unemployed workers? Wray (2000) and Tcherneva (2012) suggest that the program can easily be affordable in sovereign currency nations. Wray (2000) argues that although an ELR type program might do a little harm on budget balance, there will not be much damage.…”