Marginal Employment Subsidies: An Effective Policy to Generate Employment
(1982) , 37 pages
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- Abstract
- (en) Current unemployment is at unacceptably high levels for both the segment of the population concerned and policy-makers in most industrialised countries. The causes of the rise in world-wide unemployment are usually attributed to the severe supply shocks in the 1970s (the sharp increase in oil and other raw material prices), the associated redistribution of income from countries with high propensities to spend to countries with low propensities to spend, inadequate policy responses and rigidities in industrial economies responsible for slow adjustment to a different environment. Rigidities seem to be more severe for the countries of the EEC than for Japan and the US and unemployment in consequence has risen more sharply in the EEC. The main rigidity can be seen in the high growth of real wages. Instead of attenuating the supply shocks through moderate wage increases the effects of these shocks have been accentuated. An approximate empirical measure for these effects is provided by the sharp increase of the share of labour income in Gross Domestic Product in EEC countries” which, however, is an underestimate since firms have responded by reducing employment to improve productivity.
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Citations
Chiarella, C., & Steinherr, A. (1982). Marginal Employment Subsidies: An Effective Policy to Generate Employment (Working Papers Institut des sciences économiques 8208). https://hdl.handle.net/2078.5/278957