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Say's Law, Poverty Persistence, and Employment Neglect

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  • Alice Amsden
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    Abstract

    Grass roots methods of poverty alleviation will fail unless jobs are created or stimulated by governments (whether central or local). In the presence of high unemployment at all levels, improving the capabilities of job seekers (making them better fed and housed and educated) will only lead to more unemployment and not to more paid employment or self-employment above the subsistence level (call this the 'Kerala Effect'). To believe that improving only the supply side of the labor market is enough to reduce poverty without also improving the demand side, and investing in jobs, is logically flawed and subject to the same error as Say's Law — that 'supply creates its own demand'. Healthcare and other benefits provided through grass roots anti-poverty programs may improve the quality of life (measured by rising life expectancy). But as population growth rises, diminishing returns sets in, in Malthusian fashion, and poverty does not fall, as shown by the data provided in the article.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Journal of Human Development and Capabilities.

    Volume (Year): 11 (2010)
    Issue (Month): 1 ()
    Pages: 57-66

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    Handle: RePEc:taf:jhudca:v:11:y:2010:i:1:p:57-66

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    Keywords: Employment generation; Poverty alleviation; Say's Law; Grass-roots; Volunteerism;

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    Cited by:
    1. Laurin Janes, 2013. "Can capital grants help microenterprises reach the productivity level of SMEs? Evidence from an experiment in Sri Lanka," CSAE Working Paper Series 2013-18, Centre for the Study of African Economies, University of Oxford.
    2. Alice H Amsden, 2012. "Grass Roots War on Poverty," World Economic Review, World Economics Association, vol. 2012(1), pages 7, September.

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