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The Job Guarantee: Modern Money Theory’s proposal for full employment and price stability

In: The Elgar Companion to Modern Money Theory

Author

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  • Pavlina R. Tcherneva

Abstract

Mainstream economics presents the policy maker with an impossible choice: eradicate unemployment at the cost of inflation or keep prices stable by maintaining some level of involuntary unemployment (natural rate or the Non-Accelerating Inflation Rate of Unemployment (NAIRU)). This chapter explains the Modern Money Theory (MMT) alternative - the Job Guarantee - a permanent, federally funded and locally administered program. MMT relates unemployment to taxation; maintaining unemployment is ultimately a choice for the monopoly issuer of currency in which taxes are imposed and paid. MMT also locates the source of the price level within the exclusive powers of the state to tax, issue the currency and set the conversion rate between the currency and the goods and services for which it exchanges. The Job Guarantee, therefore, is not merely a jobs program. It is a structural macroeconomic policy that secures both full employment and price stability.

Suggested Citation

  • Pavlina R. Tcherneva, 2024. "The Job Guarantee: Modern Money Theory’s proposal for full employment and price stability," Chapters, in: Yeva Nersisyan & L. R. Wray (ed.), The Elgar Companion to Modern Money Theory, chapter 15, pages 196-212, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:18498_15
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    File URL: https://www.elgaronline.com/doi/10.4337/9781788972246.00022
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