Active versus passive policies of unemployment : growth and public finance perspectives
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Date
Authors
Gupta, Rangan
Du Toit, Charlotte Barbara
Journal Title
Journal ISSN
Volume Title
Publisher
Juta
Abstract
This paper develops a general equilibrium endogenous growth model in an overlapping
generations framework, and compares, in terms of economic growth, a passive unemployment
policy (unemployment insurance) with an active unemployment policy (government expenditures
targeted towards improving the job-finding probability of an unemployed). Besides, the standard
result of unemployment being growth reducing, under realistic parameterisation, we show that
the government, under an active policy, can generate higher growth without any compromise on
its own consumption, when compared to the unemployment benefit regime. The result, however,
depends crucially on the efficiency with which the resources are spent in creating employment.
Description
Keywords
Active and passive policies of unemployment, Unemployment benefits, Endogenous growth
Sustainable Development Goals
Citation
Gupta, R & Du Toit, CB 2009, 'Active versus passive policies of unemployment: growth and public finance perspectives', South African Journal of Economic and Management Sciences, vol. 12, no. 1, pp. 1-10. [http://www.journals.co.za/ej/ejour_ecoman.html]