Is Full Employment Inflationary?
Job Guarantee Program as an Alternative do the Macroeconomic Policy Dilemma in Brazil
Abstract
In recent decades, the economic policy of Western economies, including Brazil, has shifted from the search for full employment to the priority of price stability, often at the expense of unemployment. The Inflation Targeting Regime has operated as a mechanism that maintains high rates of unemployment and underemployment of the workforce. However, we argue that unemployment is not a necessary condition for price stability. A Job Guarantee Program (JG) can be implemented without generating inflationary pressures, functioning as an automatic fiscal stabilizer. This program would guarantee employment for those expelled from the job market, with remuneration lower than that practiced in the private sector, minimizing impacts on aggregate demand. Faced with the climate emergency and growing geopolitical instability, which could worsen inflation, the creation of alternative models of social protection and inflation control becomes even more urgent. Although it does not solve all the challenges in the world of work, the JG can guarantee full employment and price stability.
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