The applicability of the employer of last resort program to Brazil

Abstract

This paper aims to present the conceptual and theoretical framework of the employer of last resort (ELR) program and to verify the possibility of its application to the Brazilian economy. The initial hypothesis, based on the theory of Minsky (1986) and Wray (2003), is that if the government acts as an ELR, structural unemployment could be mitigated without generating an inflationary process or incurring the possible curses caused by labor market reform policies. In the present study, we identify main obstacles for the application of ELR to Brazil once it has been adequately adapted to national specificities.

Keywords:

• employer of last resort
• new consensus
• structural unemployment