The Potential Impact of Employment Policy on the Unemployment Rate Consistent with Nonaccelerating Inflation

摘要: During the past few years there has been considerable interest, among both economists and politicians, in question of how to lower unemployment rate consistent with nonaccelerating inflation by use structural policies. Although it is not possible estimate value this (which will hereafter be referred as U* ) any precision, its consensus 1978 terms about 6 percent, plus or minus one-half 1 percent. While recognition constraint on aggregate macro-economic policy taking hold, Congress debating a bill establish 4 percent overall national goal for 1983. Implicit (the socalled Humphrey-Hawkins proposal) necessity expanding labor market programs order achieve principal objective. The major component such United States direct provision job opportunities specific groups force.' These generally take form public service employment (PSE), but also some tax credits private sector. There are several objectives policy, ranging from fiscal relief local governments substitution subsidized welfare. purpose paper, however, examine potential U*, i.e., shift long-run Phillips curve left.2 Can large number PSE jobs extensive wage subsidies alter relationship between tightness that can sustained without accelerating inflation? answer depends individual markets work-in particular, nature persons toward whom targeted. little functioning these and, accordingly, probable impact subject controversy. It therefore useful frame issue manner which permits empirical testing. Such an attempt, well associated results, presented Section I paper. Some qualifications conceptual, discussed II.