A Job Guarantee for Austria’s long-term unemployed

For countries within the Euro, introducing a Job Guarantee (JG) and establishing close to full employment might pose a macroeconomic risk, as higher economic activity in the country with a Job Guarantee would mean a current account deficit, budgets deficit, and possibly financial market pressure. Despite these conceptual problems, how can a form of Job Guarantee still be implemented? I adapt the idea of a job guarantee to focus exclusively on the long-term unemployed. This ensures a lower entry rate into the Job Guarantee due to a minimum unemployment duration requirement for eligibility. While this version of the JG still lifts the worst affected out of unemployment, it keeps costs limited. For countries with an established welfare state that pays adequate unemployment and/or social assistance benefits to long-term unemployed persons, about half of the needed funds for publicly created jobs within the JG are already spent in the forms of transfers. They can be converted to make up a part of the gross wage of a JG job. This way, every long-term unemployed person in Austria can get an offer for a publicly funded, socially meaningful job.

In my research, I conduct cost calculations for Austria and show that an absolute maximum of merely 0.36% of Austrian GDP (in 2017) would be needed to finance up to 150.000 jobs for the long-term unemployed.
Here are the slides and paper:

Deutscher Titel: Eine Jobgarantie für Österreichs Langzeitarbeitslose
Presentation (German)
Paper (German)

English title: A job guarantee for the long-term unemployed in Austria
Presentation (English)

Germany’s current account surplus & spillover effects to Southern Europe

Germany is frequently critcized for harming other Euro Area countries, in particular France, Spain, Italy, Greece and Portugal. By running a large current account surplus (exporting more than importing), it articifially restricts its purchases from other countries, which costs them export revenue, production, and jobs. How much would it actually help these countries, if Germany ended its restrictive policy?

Enno Schröder and I have written two papers on this topic.

1. Where does a German demand expansion dissipate to? Does it reach the countries that need it most in Europe (Italy, Spain, Greece, Portugal)?
Working Paper hosted on the website of the IMKLink
Published version is open-access in the journal World Economy.
We use data from the World Input‐Output Database to fit a closed multiregional input–output model in order to estimate the size of spillover effects of Germany’s final demand on GDP, employment and the trade balance in Southern European countries. We find that spillover effects are rather small. Germany alone will hardly make a significant contribution to the external adjustment process in the European South.

2. How much could a coordinated European policy that includes a demand expansion of countries with a current account surplus contribute to an upswing in the Southern European nations?
Working Paper hosted on the website of the IMKLink