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9 - WAGE SUBSIDIES

from PART 2 - THE WAGE QUESTION

Published online by Cambridge University Press:  06 July 2010

G. D. N. Worswick
Affiliation:
National Institute of Economic and Social Research, London
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Summary

From time to time, and in different ways, the existing system of wage and price determination has been seen as an obstacle to full employment. Among remedies, wage or employment subsidies have been proposed. They were advanced in the interwar years, and interest in them has revived with the return of high unemployment in more recent years. The proposals have ranged from a general subsidy to all employment, to marginal subsidies to extra workers employed.

There has been comparatively little practical experience in this field in postwar Britain. The most interesting case, probably, was the Regional Employment Premium, which was introduced in the late 1960s, and although it may have had some effects (see Chapter 6, p. 59) it was phased out in the early 1970s. We shall not, however, attempt any comprehensive survey of practical measures applied in Britain, or elsewhere, nor of the many schemes of this kind which have been proposed. We will simply pick out some of the main proposals with a view to exposing their varying theoretical underpinnings, and pointing to some of the practical problems they raise.

The chapter on wage subsidies incorporated in the third edition of Pigou's Economics of Welfare in 1928, may be said to be the classic exposition of the classical view on the subject. It starts with a closed economy, with a homogeneous labour force of x + h workers, of whom x. are employed at a wage w.

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Unemployment: A Problem of Policy
Analysis of British Experience and Prospects
, pp. 104 - 108
Publisher: Cambridge University Press
Print publication year: 1991

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  • WAGE SUBSIDIES
  • G. D. N. Worswick, National Institute of Economic and Social Research, London
  • Book: Unemployment: A Problem of Policy
  • Online publication: 06 July 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511559778.010
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  • WAGE SUBSIDIES
  • G. D. N. Worswick, National Institute of Economic and Social Research, London
  • Book: Unemployment: A Problem of Policy
  • Online publication: 06 July 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511559778.010
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • WAGE SUBSIDIES
  • G. D. N. Worswick, National Institute of Economic and Social Research, London
  • Book: Unemployment: A Problem of Policy
  • Online publication: 06 July 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511559778.010
Available formats
×