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(Full) Employment Policy: Theory and Practice

  • Dimitri B. Papadimitriou

    (The Jerome Levy Economics Institute)

Although the U.S. unemployment rate in 1998 was at its lowest level since the late 1960s, the nation's employment problem is still far from solved. Although many economists assume that unemployment tends toward a natural rate below which it cannot go without creating inflation, this paper asks whether the current employment policies will be able to deal with the challenges of the next downturn. To evaluate these questions, the author examines the relative merits of three proposed strategies to improve the employment situation - a reduced workweek, employment subsidies, and a public service job opportunity program - to see if they will meet the challenges of upholding an individual's basic right to job while not stimulating inflation. He finds that a shorter workweek and wage subsidies both have failed to meet one or both of these challenges, but that a public service job opportunity program, such as the "employer of last resort policy," would satisfy both the full employment and noninflationary criteria.

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File URL: http://econwpa.repec.org/eps/mac/papers/9901/9901003.pdf
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Paper provided by EconWPA in its series Macroeconomics with number 9901003.

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Length: 27 pages
Date of creation: 29 Jan 1999
Date of revision:
Handle: RePEc:wpa:wuwpma:9901003
Note: Type of Document - Acrobat Pdf Files; prepared on IBM PC; to print on PostScript; pages: 27; figures: included
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Brunello, Giorgio, 1989. "The Employment Effects of Shorter Working Hours: An Application to Japanese Data," Economica, London School of Economics and Political Science, vol. 56(224), pages 473-86, November.
  2. L. Randall Wray, 1997. "Government as Employer of Last Resort: Full Employment without Inflation," Economics Working Paper Archive wp_213, Levy Economics Institute.
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