Musgrave, Ralph S. (2009): Creative destruction of 'government as employer of last resort'.
This is the latest version of this item.
Download (127kB) | Preview
The claim that the unemployed should be allocated to ‘government as employer of last resort’ schemes (like the WPA in the US in the 1930s) has major flaws. One flaw is the assumption that public sector work of this sort is less inflationary than private sector employment. A second flaw is the idea that WPA type schemes should be separate from existing employers. Once these two flaws are removed, WPA turns into a temporary employment subsidy that creates jobs with existing employers public and private.
A second argument leads to the same ‘temporary employment subsidy’ conclusion: as unemployment falls, the marginal product of labour falls, till NAIRU is reached. The above subsidy compensates for this fall, and thus reduces NAIRU.
Yet a third argument leads to the same conclusion: this temporary subsidy imitates a perfect labour market, a zero unemployment scenario. Thus this subsidy should facilitate a move towards zero unemployment.
|Item Type:||MPRA Paper|
|Original Title:||Creative destruction of 'government as employer of last resort'.|
|Keywords:||Unemployment; employment subsidy; employer of last resort; work progress administration.|
|Subjects:||J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J60 - General
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J63 - Turnover ; Vacancies ; Layoffs
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J64 - Unemployment: Models, Duration, Incidence, and Job Search
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J68 - Public Policy
|Depositing User:||Ralph Musgrave|
|Date Deposited:||11. Dec 2009 07:49|
|Last Modified:||22. Feb 2015 22:33|
Bogdanor, A. (2004), ‘Not Working’, Policy Exchange, London.
Bolvig, I., Jensen, P. And Rosholm, M. (2003), ‘The Employment Effect of Active Social Policy’, Discussion Paper 736, Institute for the Study of Labour (IZA), Bonn.
Booth, A.L., Francesconi, M. and Frank, J. (2000), ‘Temporary jobs: Who Gets Them, What Are They Worth, And Do They Lead Anywhere?’ Discussion Paper 00/54, Institute for Labour Research, University of Essex.
Calmfors, L., Forslund, A. and Hemstrom, M. (2002), ‘Does Active Labour Market Policy Work? – Lessons from the Swedish Experience’, Institute for Labour Market Policy Evaluation, Uppsala.
Gerfin, M., Lechner, M. And Steiger, H. (2002a), ‘Does subsidised temporary employment get the unemployed back to work? An econometric analysis of two different schemes’, Discussion Paper No. 3669, Social Science Research Network.
Gerfin, M. and Lechner, M. (2002b), ‘Microeconomic Evaluation of the Active Labour Market Policy in Switzerland’, Economic Journal, 112 (482), 854-893.
Kesselman, J. R. (1978), ‘Work Relief Programs in the Great Depression’, in J.L.Palmer, (ed.), Creating Jobs, Brookings Institution, Washington.
Mitchell, W.F. (1998), ‘The Buffer Stock Employment Model and the Path to Full Employment’, Journal of Economic Issues, 32, No. 2, 547-555.
Mitchell,W.F. and W. Mosler (2001), ‘Unemployment and Fiscal Policy’, in W. F. Mitchell and E. Carlson (eds.) (2001), Unemployment: The Tip of the Iceberg, Centre for Applied Economic Research, University of New South Wales.
Mosler, W. (1997), ‘Full Employment and Price Stability’, Journal of Post Keynesian Economics, 20, No. 2, 167-182.
Musgrave, R.S. (1991), Workfare: A Marginal Employment Subsidy for Private and Public Sectors, R.S.Musgrave, Durham, UK.
Musgrave, R.S. (2006), A Market Imitating Subsidy, in B.Greve, (ed.), The future of the welfare state: European and global perspectives, Ashgate, Aldershot.
Phelps, E. S. (1997), Rewarding Work How to Restore Participation and Self-Support to Free Enterprise, Harvard University Press.
Sawyer, M. (2003), ‘Employer of Last Resort: Could It Deliver Full Employment and Price Stability?’, Journal of Economic Issues, Vol. 37.
Sawyer, M. (2005) Employer of Last Resort: An extended response to my critics, http://188.8.131.52/MKB/MalcolmSawyer/elra.pdf
Werner, H. (1998), ‘Countries with successful employment policies – what lies behind the success?’ Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Vol. 31, Issue 2, 324-333.
Wray, L. R. (1998), ‘Zero Unemployment and Stable Prices’, Journal of Economic Issues 32, No. 2, 539-545.
Wray, L.R. (1999), Understanding Modern Money: the key to full employment and price stability, Edward Elgar, Cheltenham.
Available Versions of this Item
Private Sector "Employer of Last Resort". (deposited 13. Nov 2009 17:31)
Private Sector "Employer of Last Resort". (deposited 31. Mar 2010 05:59)
- Creative destruction of 'government as employer of last resort'. (deposited 11. Dec 2009 07:49) [Currently Displayed]
- Private Sector "Employer of Last Resort". (deposited 31. Mar 2010 05:59)