Employer of Last Resort Program for Italy: It’s cheaper than you think

The paper examines how to build a comprehensive program that can effectively cure unemployment using the Employer of Last Resort scheme coming from the Minskyan tradition, by which the State offers a job to everyone willing to work. Replying to the many critiques it received, we show that the ELR program is the best alternative in terms of effectiveness in curing unemployment, public finance soundness, social and financial stability, long-term growth and international economic imbalances. We also discuss suggestions to ensure the efficiency of its institutional design. In this context we highlight the accountability issue, that is largely ignored in the related literature and that is paramount, given the state of public finances after the crisis. We argue that accountability and efficiency, that are core issues for the project to be politically viable, can be addressed deepening the analogy with lending of last resort. In particular, to supervise ELR projects a State bank should be set up that, along with controls from below, can ensure the cost-effectiveness of the scheme. We also simulate how much the ELR program would cost for Italy, showing that its gross cost would be less than 2% of the GDP and its net cost would be negative.