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Unemployment as a social cost


  • Paolo Ramazzotti

    (University of Macerata)

  • Marco Rangone

    (University of Padova)


Over the last decade, workfare programmes provided support to the unemployed only insofar as they were willing to accept a job. The theoretical underpinnings of these programmes are that institutional constraints prevent labour supply from adjusting to the technologically determined requirements of labour demand. We contend that when individuals look for a job, they generally want to take into account non-monetary features such as occupational status. Status cannot be traded, it usually is complementary to income, it determines lifestyles and life possibilities. As for labour demand, its requirements do not reflect efficient behaviour and technical constraints because business ”efficiency” cannot be taken to be a measure of social efficiency and technology cannot be used as a benchmark to assess the efficiency of business conduct. We suggest that Sen’s notion of capabilities may constitute an appropriate benchmark to assess the social efficiency of the economic system. This leads us to a few policy implications. The ”capabilities benchmark” leads us to stress the importance of freedom to choose how to conduct one’s life. Acting in favour of freedom involves the understanding of how business strategies affect learning patterns and available choice sets. It also involves the assessment of policy issues - such as cooperation between the scientific community and business, scientific freedom, educational goals and their institutional implementation, and unemployment relief systems - which may influence the relation between business strategies and social learning.

Suggested Citation

  • Paolo Ramazzotti & Marco Rangone, 2004. "Unemployment as a social cost," Working Papers 20-2004, Macerata University, Department of Finance and Economic Sciences, revised Nov 2008.
  • Handle: RePEc:mcr:wpdief:wpaper00020

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    References listed on IDEAS

    1. Trinh Le & John Gibson & Les Oxley, 2003. "Cost- and Income-based Measures of Human Capital," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 271-307, July.
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    5. Dale Jorgenson & Barbara M. Fraumeni, 1989. "The Accumulation of Human and Nonhuman Capital, 1948-84," NBER Chapters,in: The Measurement of Saving, Investment, and Wealth, pages 227-286 National Bureau of Economic Research, Inc.
    6. Giuseppe Folloni & Giorgio Vittadini, 2010. "Human Capital Measurement: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 24(2), pages 248-279, April.
    7. Les OXxley & Ttrinh Le & John Gibson, 2008. "Measuring Human Capital: Alternative Methods and International Evidence," Korean Economic Review, Korean Economic Association, vol. 24, pages 283-344.
    8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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