Chapter

Setting Objectives, Facing Trade-Offs

Gary S. Fields

in Working Hard, Working Poor

Published in print December 2011 | ISBN: 9780199794645
Published online January 2012 | e-ISBN: 9780199928606 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199794645.003.0006
Setting Objectives, Facing Trade-Offs

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This chapter makes six points. First, policy makers have identified four key labor market policy objectives—create more jobs, raise the earnings of those working, increase social protection, and ensure that core labor standards are honored—and should keep all four in mind and not go after just one heedless of the other three. Second, while each of these four objectives is important in its own right, the overriding objective in the author's view is reducing poverty to the maximum extent possible. Third, policies aimed at helping advance one labor market policy objective may be harmful to another; tradeoffs on the policy side need to be faced explicitly. Fourth, resources always have alternative uses; tradeoffs on the budgetary side also need to be faced explicitly. Fifth, a good way to bring all of these considerations together is to ask about the size of the extra social benefits, the size of the extra social costs, and how they compare for one or more uses of a development budget; it is better to answer the right questions approximately than to answer the wrong questions precisely. And sixth, when the right questions are asked but the answers are not known, it would be good to carry out in-depth research to find out the answers; econometric studies and randomized experiments both have an important place in discovering what matters.

Keywords: objectives; poverty; policy tradeoffs; budgetary tradeoffs; social benefits; social costs; econometric studies; randomized experiments

Chapter.  5793 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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