ABSTRACT
A stabilization scheme patterned on the employer of last resort (ELR) proposal would have clear benefits for the European Union (EU). This chapter considers the ELR proposal as a means of combining price stability with high employment. It provides considerations on its introduction into the economic policy apparatus of the EU. Export-led growth in the context of European Economic and Monetary Union (EMU) can only mean relative to the rest of the world outside the EU. It is not a policy alternative that can be operated by any single member country. The discussion of policy in the EU suggests that there is a more important issue that an ELR scheme would resolve. As argued, differential wage policy in different countries may create a risk of deflation with the EU. The changes required to increase flexibility are often considered as supply-side changes – making labor supply more flexible.
