The case for a job guarantee policy in Germany: A political-economic analysis of the potential benefits and obstacles

Jannik J. Landwehr

No 150/2020, IPE Working Papers from Berlin School of Economics and Law, Institute for International Political Economy (IPE)

Abstract: As a bottom-up approach, a Job Guarantee policy can tackle the issue of unemployment on the macroeconomic, socioeconomic, and individual level in a unique way and promote the social inclusion of the unemployed. This paper aims at analysing the potential obstacles - namely inflationary pressure and financing - of a Job Guarantee policy implementation in the case of Germany. A Job Guarantee's impact on inflation depends on excess production capacities of economic sectors as well as collective wage bargaining structures. In this regard, this paper concludes that under a correct policy design inflationary pressure is no major obstacle. Strengthening workers' bargaining power in Germany through a Job Guarantee policy could even contribute to reaching the inflation target and prevent deflation. However, deficiencies of the European institutional setup and the analogous restrictive fiscal mantra at European and national level limit the political scope for financing a Job Guarantee policy. Notwithstanding, a small to medium size Job Guarantee programme - comprising up to all currently unemployed willing to work - is politically and legally feasible.

Keywords: Job Guarantee; Employer-of-Last-Resort; Public Works; Unemployment; Underemployment; Full Employment; Inflation; Fiscal Policy; Debt Brake (search for similar items in EconPapers)
JEL-codes: E24 E62 H63 J68 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ipewps:1502020

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