POST KEYNESIAN RESPONSE AGAINST NEOLIBERAL POLICES IN FULL EMPLOYMENT AND PRICE STABILITY CONTEXT: EMPLOYER OF LAST RESORT (ELR)

Abstract

This paper provides a survey of Employer of Last Resort (ELR) and discusses ELR experiences in some countries. ELR offers employment to anyone who seks work but would otherwise be without a job. ELR generates mechanisms for combining full employment and price stability. In the past few years there have been a number critical assessments of ELR. Post Keynesians sought to provide a theoretical and practical discussion of the ELR. It supports the notions of function finance (Lerner 1943) and state theory of money (Knapp 1924) for ELR. Budget deficit for the ELR is financed by goverment taxation and printing money.Post Keynesians argue that for a sovereign nation, there is no question of the financial affordability of an ELR program. Post Keynesian approach always argues that ELR can work for developing countries. Experiences in Argentina’s Jefes programme and India’s Employment Guarantee Scheme support that the ELR can work if political support continues and strong institutional infrastructure is created. Moreover the ELR budgetary costs are very low. This paper examined the ELR program as an important camponent of a strategy of employment creation.