Archive

DIMITRI B. PAPADIMITRIOU

It has been shown that unemployment has far-reaching effects all leading to an inequitable distribution of well-being. On the other hand, 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 of a government job creation program, such as employment guarantee scheme or employer of last resort that would satisfy the non-inflationary criteria. The paper examines the international experience of government job creation programs and pays a particular emphasis to the more successful programs instituted in Argentina and India. The conclusion drawn is that the application of an employer of last resort policy fosters economic development and in addition becomes a vehicle to meeting the Millennium Development Goals.