Promoting Equality Through an Employment of Last Resort Policy

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Abstract:

To put an economy on an equitable growth path, economic development must be based
on social efficiency, equity, and job creation. It has been shown that unemployment has
far-reaching effects, all leading to an inequitable distribution of well-being. But many
economists assume that unemployment tends toward a natural rate below which it cannot
go without creating inflation. The paper considers a particular employment strategy: a
government job creation program, such as an employment guarantee or employer-of-lastresort
scheme, that would satisfy the noninflationary criteria. The paper analyzes the
international experience of government job creation programs, with particular emphasis
on the cases of Argentina and India. We conclude by considering the application of an
employer-of-last-resort policy to the developing world and as a vehicle to meeting the
Millennium Development Goals.