Employer of Last Resort: A Case Study of Argentina's Jefes Program

Abstract

Since 1997, a number of researchers (many of whom are now associated with the University of Missouri-Kansas City) have been advocating a job creation program that has been variously called the employer of last resort (ELR), job guarantee, public service employment, or buffer stock employment program. These proposals were based on earlier work by Hyman Minsky, Abba Lerner, Phillip Harvey, Wendell Gordon, and Charles Killingsworth and recalled the US New Deal experience with job creation programs. Most of the work so far has been at the theoretical level (Harvey 1989 and Ginsburg 1983 are important exceptions). However, Argentina recently adopted a job creation program that is explicitly based on our proposals. This paper provides a preliminary analysis of Argentina's experience. Through most of the 1990s, Argentina was the poster child for the Washington Consensus, adopting a currency board, opening markets, downsizing government, and freeing capital. After its economy collapsed and unemployment and poverty skyrocketed, it implemented a limited employer of last resort program called Plan Jefes de Hogar, to provide jobs to poor heads of households. A Labor Ministry economist, Daniel Kostzer, had become familiar with the ELR proposals developed in the US and helped to design and implement the Jefes program. By most measures, the program has been a tremendous success, providing jobs to 2 million workers, or about 5% of the population and 13% of the labor force.