IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Workfare: a marginal employment subsidy for public and private sectors (2nd edition)

  • Musgrave, Ralph S.

Workfare has had a chequered history because it has not been well thought out. It increases employment not just because it calls the bluff of the workshy; this element need not be all that harsh. It works because it acts as a marginal employment subsidy of a type not tried before (except unwittingly as part of workfare). The subsidy is as follows. As full employment is approached (i.e.given rising demand), dole queue labour gets progressively less suited to available vacancies, which induces employers to out bid each other in an attempt to attract or retain better quality or more suitable labour, and this is inflationary. This phenomenon is behind NAIRU, the level of unemployment below which it is allegedly impossible to go. But the above unsuitability of the unemployed is temporary for each person: a job usually appears sooner or later for which they are suited. Thus the antidote is to compensate employers for this unsuitability, i.e. subsidise the unemployed into temporary jobs and this is more or less what workfare has always consisted of. This ought to reduce NAIRU. The above NAIRU reducing characteristic of workfare is key to proving it should operate as much in the private as public sector. In fact it works better in the former because the private sector is better at employing relatively unskilled labour. It is often claimed that workfare should take the form of specially set up job creation schemes. The arguments for this do not stand inspection (and nor do a large majority of other arguments for these schemes). Thus workfare jobs should be with existing employers. To effect workfare in this form, the unemployed are made available to all employers at little or no charge to the latter, while the number of jobs so created is strictly limited so as to prevent employers replacing existing em¬ployees with workfare employees. The above all amounts to saying that there is a much stronger case for heavily subsidised temporary employment agencies than for subsidised normal employment agencies (Job Centres in the U.K.). Or to put it yet another way, in a totally free market (i.e. in the absence of unemployment benefit) the unemployed have the choice of doing nothing, or doing a job other than their usual one for a while. To date, governments have subsidised only the former. This booklet claims governments should subsidise the latter activity (perhaps at the expense of the former).

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: https://mpra.ub.uni-muenchen.de/14206/1/MPRA_paper_14206.pdf
File Function: original version
Download Restriction: no

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14206.

as
in new window

Length:
Date of creation: 22 Mar 2009
Date of revision:
Handle: RePEc:pra:mprapa:14206
Contact details of provider: Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: https://mpra.ub.uni-muenchen.de

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Calmfors, Lars & Forslund, Anders, 1991. "Real-Wage Determination and Labour Market Policies: The Swedish Experience," Economic Journal, Royal Economic Society, vol. 101(408), pages 1130-48, September.
  2. Disney, Richard & Webb, Steven, 1991. "Why Are There So Many Long Term Sick in Britain?," Economic Journal, Royal Economic Society, vol. 101(405), pages 252-62, March.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:14206. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.