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Full Employment: Are We There Yet?

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  • Flavia Dantas
  • L. Randall Wray

Abstract

Flavia Dantas and L. Randall Wray argue that the emerging conventional wisdom--that the US economy has reached full employment--is flawed. The unemployment rate is not providing an accurate picture of the health of the labor market, and the common narrative attributing shrinking labor force engagement to aging demographics is overstated. Instead, falling prime-age participation rates are the symptom of a structural inadequacy of aggregate demand--a problem of insufficient job creation and stagnant incomes that conventional public policy remedies have been unable to address. The solution to our long-running secular stagnation requires targeted, direct job creation for those at the bottom of the income scale.

Suggested Citation

  • Flavia Dantas & L. Randall Wray, 2017. "Full Employment: Are We There Yet?," Economics Public Policy Brief Archive ppb_142, Levy Economics Institute.
  • Handle: RePEc:lev:levppb:ppb_142
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    References listed on IDEAS

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    1. Dimitri B. Papadimitriou & Greg Hannsgen & Michalis Nikiforos & Gennaro Zezza, 2015. "Fiscal Austerity, Dollar Appreciation, and Maldistribution Will Derail the US Economy," Economics Strategic Analysis Archive sa_may_15, Levy Economics Institute.
    2. Stephanie Aaronson & Bruce Fallick & Andrew Figura & Jonathan Pingle & William Wascher, 2006. "The Recent Decline in the Labor Force Participation Rate and Its Implications for Potential Labor Supply," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(1), pages 69-154.
    3. Dimitri B. Papadimitriou & Michalis Nikiforos & Gennaro Zezza & Greg Hannsgen, 2014. "Is Rising Inequality a Hindrance to the US Economic Recovery?," Economics Strategic Analysis Archive sa_apr_14, Levy Economics Institute.
    4. Lawrence H Summers, 2014. "U.S. Economic Prospects: Secular Stagnation, Hysteresis, and the Zero Lower Bound," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 49(2), pages 65-73, April.
    5. Pavlina R. Tcherneva, 2012. "Full Employment through Social Entrepreneurship: The Nonprofit Model for Implementing a Job Guarantee," Economics Policy Note Archive 12-02, Levy Economics Institute.
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