Original Research

Active versus passive policies of unemployment: growth and public finance perspectives

Rangan Gupta, Charlotte Du Toit
South African Journal of Economic and Management Sciences | Vol 12, No 1 | a257 | DOI: https://doi.org/10.4102/sajems.v12i1.257 | © 2011 Rangan Gupta, Charlotte Du Toit | This work is licensed under CC Attribution 4.0
Submitted: 11 August 2011 | Published: 12 August 2011

About the author(s)

Rangan Gupta, University of Pretoria, South Africa
Charlotte Du Toit, University of South Africa

Full Text:

PDF (190KB)

Share this article

Bookmark and Share

Abstract

This paper develops a general equilibrium endogenous growth model in an overlapping generations framework, and compares, in terms of economic growth, a passive unemployment policy (unemployment insurance) with an active unemployment policy (government expenditures targeted towards improving the job-finding probability of an unemployed). Besides, the standard result of unemployment being growth reducing, under realistic parameterization, we show that the government, under an active policy, can generate higher growth without any compromise on its own consumption, when compared to the unemployment benefit regime. The result, however, depends crucially on the efficiency with which the resources are spent in creating employment. 

Keywords

No related keywords in the metadata.

Metrics

Total abstract views: 1506
Total article views: 2191


Crossref Citations

No related citations found.