Has the Time for a European Job Guarantee Policy Arrived?

Related publications

• Working Paper No.1042 13 February 2024

  Saving Social Security

  Edward Lane
  Abstract

  For more than 25 years, the Social Security Trust Fund was projected to run out of money in 2033 (give or take a few years), potentially causing benefits to be severely reduced in the absence of corrective legislative action. Today (February 2024), projections are made by the Social Security Administration that indicate that future benefits will need to be reduced by roughly 25 percent or taxes will need to be increased by about 33 percent, or some combination to avoid benefit curtailment. While Congress will most probably prevent benefits from being reduced for retirees and those nearing retirement, the longer Congress and the president take to address the shortfall, the more politically unpalatable (and possibly draconian) the solutions will be for all others.

  Dozens of proposals are being evaluated to address the long-term problem by mainstream benefits experts, economists, think tanks, politicians, and government agencies but, with rare exceptions from a few economists, none address the short-term problem of Trust Fund depletion, provide a workable roadmap for the long-term challenges, or consider fundamental financing differences between the federal government and the private sector.

  This paper aims to address these issues by suggesting legislative changes that will protect the Social Security system indefinitely, help ensure the adequacy of benefits for retirees and their survivors and dependents, and remove confusing and misleading legislative and administrative complexity. In making recommendations, this paper will demonstrate that the Social Security Trust Funds, while legally distinct, are essentially an artificial accounting contrivance within the US Treasury that have become a tool to force program changes that, for ideological reasons, will likely shift an increasing financial burden onto those who can least bear it. Finally, while the focus of this paper is on the Social Security system, it would be incomplete without also addressing, albeit in a limited way, the larger political issue of the nation’s debt and deficit along with the implications for inflation

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• Working Paper No.1037 10 January 2024

  Markups, Profit Shares, and Cost-Push-Profit-Led Inflation

  Michalis Nikiforos, Simon Grothe and Jan David Weber
  Abstract

  The post-pandemic surge in inflation was accompanied by a surge in the corporate share of profits. As a result, several economists and policy makers have given to it names such as “profit-led inflation” or “sellers’ inflation.” The present paper discusses the extent to which profit-led inflation, as an explanation for the recent surge in inflation, is compatible with what we know about the price-setting behavior of firms, income distribution, and inflation. We do that in juxtaposition to two recent critiques: that the increase in the profit share is the result of cyclical factors, and that the increase in import prices leads to higher profit shares even under constant markups. We show that there is little evidence that the recent surge in profitability is cyclical in nature. Moreover, after outlining the Structuralist/Kaleckian theories of prices and inflation we argue that profit-led inflation does not require an increase in the markup of the firms and is consistent with these theories. In the face of large import and other price shocks even under constant markups, firms are able to pass the burden of adjustment to real wages. Thus, the term profit-led emphasizes the distributional source and consequences of inflation. We also provide an empirical examination of the markups in the post-pandemic period using data from the Compustat database. We show that, on average, firms were able to increase or maintain their markups, although there is significant heterogeneity across sectors or the position of the firms in the distribution of markups.

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• One Pager No.71 14 December 2023

  Has the Time Arrived for a Job Guarantee in Europe?

  Rania Antonopoulos
  Abstract

  In comparison to the policy responses in the aftermath of the 2008–9 global financial crisis, the reactions of EU policymakers to the combined shocks of the COVID-19 crisis and Ukraine-Russia conflict reveal a greater willingness to deploy public finance in support of the population. Yet, while this display of renewed solidarity is commendable, policymakers have a long way to go in building a more resilient and sustainable EU. A confrontation with long-standing “business as usual” EU rules and policies is necessary, and it is in this context that the job guarantee deserves serious consideration. Acting for the common purpose of reducing and eventually eliminating long-term unemployment would send a clear message that a Social Europe is possible.

  Download One-Pager No. 71 PDF (133.66 KB)