I’ve added a branch to the Baseline Model code to support the Job Guarantee and written up a summary and the detailed algorithm changes required.
The changes are made by adding a “Firm 101” to the model that acts like any other firm other than it conforms to the Job Guarantee restrictions:
- there is always a job opening
- the wage is fixed
- the wage is always paid as Firm 101 has no liquidity restrictions
In addition Firm 101 has adaptations to the economy it is running in:
- labour hours are transformed into the same single, stockable, tradeable good in the economy as all other hours are
- the good is sold at a fixed price
- the good competes with private sector output at that price
- sale of the good at the fixed price is the only taxation mechanism
- the productivity of Firm 101 is much lower than a private firm
- nobody is ever made redundant from Firm 101
- households try to get off the Job Guarantee
- households still hold out for a bit looking for a better wage, if they are made redundant by a private firm, and will remain unemployed while doing so
The restrictions and adaptations are included to ensure the model Job Guarantee controls inflation properly.
I have a truly marvelous demonstration of this update which this blog post is too long to contain.