Responding to the Unemployment Challenge: A Job ... RESPONDING TO THE UNEMPLOYMENT CHALLENGE: A JOB

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Transcript of Responding to the Unemployment Challenge: A Job ... RESPONDING TO THE UNEMPLOYMENT CHALLENGE: A JOB

  • RESPONDING TO THE UNEMPLOYMENT CHALLENGE: A JOB GUARANTEE PROPOSAL FOR GREECE Observatory of Economic and Social Developments, Labour Institute, Greek General Confederation of Labour (Παρατηρητὴριο Οικονομικὼν kαι Κοινωνικὼν Εξελὶξεων, Ινστιτοὺτο Εργασὶας, ΓΣΕΕ)

    Director of Research: Rania Antonopoulos Research Team: Sofia Adam, Kijong Kim, Thomas Masterson, Dimitri B. Papadimitriou

    April 2014 Annandale-on-Hudson, New York

    of Bard College

    Levy Economics Institute

  • Levy Economics Institute of Bard College 1

    RESPONDING TO THE UNEMPLOYMENT CHALLENGE: A JOB GUARANTEE PROPOSAL FOR GREECE Observatory of Economic and Social Developments, Labour Institute, Greek General Confederation of Labour (Παρατηρητὴριο Οικονομικὼν kαι Κοινωνικὼν Εξελὶξεων, Ινστιτοὺτο Εργασὶας, ΓΣΕΕ)

    Director of Research: Rania Antonopoulos Research Team: Sofia Adam, Kijong Kim, Thomas Masterson, Dimitri B. Papadimitriou

    April 2014 Annandale-on-Hudson, New York

    Copyright ©2014 Levy Economics Institute of Bard College

    ISBN 978-1-936192-40-3

  • 2 Research Project Report, April 2014

    CONTENTS

    Acknowledgments 4

    About the Authors 4

    Acronyms and Abbreviations 5

    Figures 6

    Tables 6

    Executive Summary 8

    1. The National Context 12

    1.1 The Specter of Unemployment 12

    1.2 The Financial “Bailout” and Austerity Policy 12

    1.3 The High Price of the “Rescue” Packages 14

    1.4 The Years Ahead: Is There a Way Out? 15

    1.5 The Job Guarantee 16

    2. Emerging Trends in Employment and Unemployment 18

    2.1 The Years Prior to the Crisis 18

    2.2 The Decline in Employment, 2008–13 20

    2.2.1 Changes in Employment by Sector 20

    2.2.2 Changing Distribution of Employment by Professional Status 20

    2.3 Unemployment Trends 22

    2.3.1 Long-Term Unemployment 23

    2.3.2 Distribution of Unemployment by Educational Attainment Level 24

    2.3.3 The Gender Dimension of Unemployment 25

    2.3.4 Youth Unemployment 26

    2.4 Distribution of Monthly Earnings of Employees in the Private Sector, 2012 29

    2.5 Final Reflections 31

    3. The Need for an “Employer of Last Resort” Policy 33

    3.1 Policy Options for Employment Generation during an Economic Depression 33

    3.2 Minsky’s ELR Policy 34

    3.3 The Recent Experience in Greece with Public-benefit Job Creation 36

  • Levy Economics Institute of Bard College 3

    4. The Job Guarantee Proposal 38

    4.1 Introduction to the Key Elements of the Job Guarantee 38

    4.2 Introduction to the Methodology and Data 39

    4.3 The Four Benchmark Scenarios 40

    4.4 Generating the Required Micro Data Set 41

    4.4.1 Benchmarks for Scaling Up 41

    4.4.2 Data and Methods 42

    4.4.3 “Aging” the 2010 SILC Data 43

    4.4.4 Matching Households in the “Aged” 2010 SILC Data with the 2012 LFS 46

    4.5 Benchmarks for Scaling Up PKE 2012 to a Job Guarantee 47

    4.5.1 Matching PKE/GSEE Applicants with Individuals in the (Matched) 2012 LFS 47

    4.5.2 Our Estimates of the Benchmark Scenarios 48

    5. Macroeconomic Impacts 50

    5.1 Simulation Results of Scenario 1: 200,000 Jobs Target 53

    5.2 Simulation Results of Scenario 2: 300,000 Jobs Target 55

    5.3 Simulation Results of Scenario 3: 440,000 Jobs Target 57

    5.4 Simulation Results of Scenario 4: 550,000 Jobs Target 59

    5.5 Summary Results: The Macroeconomic Benefits of JG 61

    5.6 Debt Reduction Benefits of a Job Guarantee 61

    5.7 Methodology: Employment Impact Assessment 62

    5.7.1 Input-Output Tables 62

    5.7.2 Construction of the JG Sector: A Synthetic Sector Approach 64

    5.7.3 Employment Effects of the JG Program 65

    6. Concluding Remarks: The Imperative of a JG and a Means of Financing 69

    Bibliography 72

    Appendices 75

    Appendix A: Tables 0.1–0.4