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Selective Use of Discretionary Public Employment and Economic Flexibility

Listed author(s):
  • Mathew Forstater

    (The Jerome Levy Economics Institute)

Registered author(s):

    Full employment is normally associated with structuralrigidities that may result in production bottlenecks and inflationary pressures. Flexibility or elasticity of the production system istherefore a desirable feature of an economic system. Many standardmodels, however, exhibit flexibility because of the use of unacceptablyunrealistic assumptions. While unemployment and excess capacity areimportant real- life factors that endow economic systems with flexibility, the flexibility gained in this manner comes at a high social and economiccost. This paper explores these issues and proposes the selective use ofdiscretionary public employment as a means of promoting higher levels ofemployment--and even full employment--without creating structuralrigidities, resulting in negative enivronmental consequences, or causing undesirable geographic dislocation of workers.

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    Paper provided by EconWPA in its series Macroeconomics with number 9802014.

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    Length: 28 pages
    Date of creation: 10 Feb 1998
    Handle: RePEc:wpa:wuwpma:9802014
    Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on PostScript; pages: 28; figures: included
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    1. Imad A. Moosa, 1997. "On the Costs of Inflation and Unemployment," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 19(4), pages 651-666, July.
    2. L. Randall Wray, 1997. "Government as Employer of Last Resort: Full Employment without Inflation," Economics Working Paper Archive wp_213, Levy Economics Institute.
    3. Mario Amendola & Jean-Luc Gaffard, 1988. "The innovative choice. An economic analysis of the dynamics of technology," Post-Print halshs-00420361, HAL.
    4. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
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