ILO Study Puts Job Creation Ahead of Deficit Reduction
This is quite an interesting and very timely paperÂ from the ILO International Institute for Labour Studies, squarely directed to next week’s meeting of G20 labour ministers.Â As pressures to cut budget deficits intensify, it argues that job-centered spending measures can in fact reinforce fiscal sustainability while boosting employment.Â Austerity measures which raise unemployment today can lead to the same deficit outcome a few years hence asÂ job oriented stimulus packages.
It’s a version of the “Laffer Curve” argument. Only it’s a Keynesian, demand-side Laffer curve, rather than the Classical, supply-side Laffer curve.
Unfortunately, when I followed the link in the paper:
“The equations which serve as a basis for the simulations shown in Figure 4 can be found in http://www.ilo.org/inst
. They were estimated using General Method of Moments techniques.”
I couldn’t find the equations. The link just gave me the general ILO website.
I agree that it can be theoretically possible to get a Keynesian Laffer Curve, as well as a Classical Laffer Curve. But without seeing those equations, it’s hard to say if it makes sense in fact.