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Active Manpower Policy and the Inflation Unemployment-Dilemma

Rudolf Meidner
The Swedish Journal of Economics
Vol. 71, No. 3, Economic Problems of the Labor Market (Sep., 1969), pp. 161-183
Published by: Wiley on behalf of The Scandinavian Journal of Economics
DOI: 10.2307/3439367
Stable URL: http://www.jstor.org/stable/3439367
Page Count: 23
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Active Manpower Policy and the Inflation Unemployment-Dilemma
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Abstract

This paper treats the role of an active manpower policy as a means of solving the well-known dilemma between high employment and inflation. The author emphasizes the fact that the scope of selective labour market measures is decisive for the total level of demand and employment compatible with economic balance. These measures can lower the Phillips curve by improving the functioning of the economy and by controlling market forces. When selective labour market policy is expanded (in combination with anti-inflationary demand measures using general methods) three problems emerge: (a) a reduction of demand may tend to have unfavourable effects on the propensity to invest, (b) the proposed mix of measures tends to hit particularly the so-called marginal groups and may lead to a division of the economy into one market sector manned by attractive labour and one sector administered by society which employs the remainder of the labour force, and (c) when manpower policy has reached an advanced level, it will tend to become a market-directing policy, which gives rise to difficult administrative problems and makes an integration with long-term industrial policy necessary. One of the main tasks of future research is to find the combination of selective measures which will have the best effects in terms of lowering the Phillips curve. Other questions that have yet to be answered are: How is economic growth influenced by different combinations of general and selective measures? How should welfare losses be estimated and compensated with respect to individuals? How should a labour market policy be formulated which would assume responsibility for a growing part of total employment?

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