Employment, Growth and Finance.

• Author: Cate, Tom

In July 1993 over forty papers were presented to the third University of Tennessee Post Keynesian Workshop. From that group the editors selected fourteen papers to be included in this volume. As the title indicates the papers are grouped into three parts.

The first six essays deal with the question of employment. Sawyer states that full employment is not the norm for the decentralized market economy and articulates five conditions associated with full employment. Goldsmith, Veum and Darity state that the cost of unemployment is borne mainly by white women and non-white men and women and conclude that as the duration of unemployment increases a person's sense of why she/he is unemployed shifts from internal (I am the cause) to external (they are the cause). This reviewer liked the way by which the authors moved from a known, the incidence of unemployment, to the paper's conclusion, the shift of the locus of the cause of unemployment. Bunting notes that unemployment is concentrated in the lower four quintiles of the income distribution and shows that in an effort to maintain their relative standard of living the individuals in those quintiles have increased their rate of consumption with the result that the national rate of saving has decreased. An avenue for future research would be an examination of Bunting's reason for the decline of the rate of saving and Duesenberry's relative income hypothesis. Suplicy and Cury propose a guaranteed minimum income as a way of promoting full employment in Brazil. This particular essay, while promoting one possible solution to the problem of Brazilian unemployment, ignores the political aspects of the unemployment problem: what is the attitude of the political and economic elites toward unemployment. Perhaps space considerations precluded discussing that point; but such a discussion can not be avoided. Mott and Slattery argue that the stagnation which has gripped the OECD economies for the last two years, 1991 to 1993, is the result of macroeconomic policies designed to hold down wage costs and to reduce that rate of inflation and conclude that prospects are dim for high levels of employment if income is stagnant because income drives employment. Shapiro examines pay schemes from the perspective of the principal-agent problem and concludes that employment could be increased if firms were flatter and relied on job-connected pay schemes. This essay does an excellent job of examining the macroeconomic problem...