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Say's Law, Poverty Persistence, and Employment Neglect

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  • Alice Amsden

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.

Suggested Citation

  • Alice Amsden, 2010. "Say's Law, Poverty Persistence, and Employment Neglect," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 11(1), pages 57-66.
  • Handle: RePEc:taf:jhudca:v:11:y:2010:i:1:p:57-66
    DOI: 10.1080/19452820903481434
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    Citations

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    Cited by:

    1. Greenstein Joshua, 2015. "New Patterns of Structural Change and Effects on Inclusive Development: A Case Study of South Africa and Brazil," WIDER Working Paper Series 006, World Institute for Development Economic Research (UNU-WIDER).
    2. Hartmann, Dominik & Guevara, Miguel R. & Jara-Figueroa, Cristian & Aristarán, Manuel & Hidalgo, César A., 2017. "Linking Economic Complexity, Institutions, and Income Inequality," World Development, Elsevier, vol. 93(C), pages 75-93.
    3. Eun Mee Kim, 2015. "Korea's evolving business.government relationship," WIDER Working Paper Series 103, World Institute for Development Economic Research (UNU-WIDER).
    4. Dominik Hartmann & Cristian Jara-Figueroa & Miguel Guevara & Alex Simoes & C'esar A. Hidalgo, 2017. "The structural constraints of income inequality in Latin America," Papers 1701.03770, arXiv.org, revised Jan 2017.
    5. Bateman, Milford, 2013. "The age of microfinance: Destroying Latin American economies from the bottom up," Working Papers 39, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    6. Alice H Amsden, 2012. "Grass Roots War on Poverty," World Economic Review, World Economics Association, vol. 2012(1), pages 114-114, September.
    7. 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.
    8. repec:wea:worler:v:2012:y:2012:i:1:p:7 is not listed on IDEAS

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