Defines employer of last resort
Hugh Sturgess 16, University of Sydney, “Would a Job Guarantee Guarantee Jobs? An Analysis of the Employer of Last Resort Proposal,” 10/12/16, https://ses.library.usyd.edu.au/bitstream/handle/2123/16650/Hugh%20Sturgess%20Honours%20Thesis.pdf;jsessionid=D699E22B1A683CFCB48554C3BD41CFA1?sequence=2
The term “employer of last resort” recalls the role of the central bank as a lender of last resort, and operates on a similar principle. The government, through the JG, acts as a “market maker” in labour - it sets a price at which it will buy any quantity of labour for any period of time. The result is that a stock of unemployed workers is replaced by a “buffer stock of employed labour” (Mitchell, 1998: 549; italics mine) that responds to the health of the broader labour market in a countercyclical way. It stabilises the price of the “buffer stock” - it restrains wages growth during expansions (by disemploying workers from the JG) and prevents wage declines during slumps (by hiring workers) (Mitchell and Mosler, 2002). The JG creates a reserve army of labour, but one actively deployed in productive activities.