Full Employment Through a Job Guarantee: A Response to the Critics

24 Pages Posted: 29 Jan 2014

See all articles by William F. Mitchell

William F. Mitchell

University of Newcastle (Australia) - School of Policy

L. Randall Wray

University of Missouri at Kansas City; Bard College - The Levy Economics Institute

Date Written: January 1, 2005

Abstract

In the past few years, there have been a number of critical assessments of the job creation proposal that has been variously termed the Job Guarantee (JG), Public Service Employment (PSE), Buffer Stock Employment (BSE), or Employer of Last Resort (ELR) program. (The terms are interchangeable and reflect the evolution of the literature.)

This paper reviews the progress of the development of the JG approach and responds to the main criticisms, i.e., that: 1. JG increases employment by stimulating aggregate demand and thus operates no differently from any 'Keynesian' fiscal policy or monetary policy; 2. JG could increase employment but it cannot enhance improve price stability—it is still subject to a 'NAIRU' constraint of some sort; 3. JG is, at best, a 'make work' program and replaces unemployment with underemployment; 4. ELR proposals have ignored the substantial logistical problems generated by cyclical fluctuation of participation in the program; 5. JG supporters have ignored impacts on long-term government finance imposed by the government budget constraint; and 6. JG supporters ignore the 'fact' that it will violate the external balance goal.

Keywords: ELR, unemployment, job guarantee, public service employment, buffer stock employment, employer of last resort

Suggested Citation

Mitchell, William F. and Wray, L. Randall, Full Employment Through a Job Guarantee: A Response to the Critics (January 1, 2005). Available at SSRN: https://ssrn.com/abstract=1010149 or http://dx.doi.org/10.2139/ssrn.1010149

William F. Mitchell

University of Newcastle (Australia) - School of Policy ( email )

Centre of Full Employment and Equity
England NE1 7RU
Australia
+61 2 4921 5027 (Phone)
+61 2 4921 8731 (Fax)

HOME PAGE: http://e1.newcastle.edu.au/coffee

L. Randall Wray (Contact Author)

University of Missouri at Kansas City ( email )

5100 Rockhill Road
Kansas City, MO 64110-2499
United States

Bard College - The Levy Economics Institute

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

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