Creating Jobs — What About the Supply Side?

Abstract

The supply side is the other half of the double-edged approach to job creation. Without improvements here, a short-term demand expansion such as that proposed in Chapter 5 will be impotent. So we need to use both edges of the sword to hack away at the unemployment problem. The same is true in other areas. If British Rail, for example, were to run a highly successful advertising campaign to attract passengers and boost demand, they would soon run into problems if they did not expand supply as well. Trains would become overcrowded, queues would build up at ticket offices, more and more trains would run late and so on. They would need to improve the supply side as well to keep those passengers. Computerised ticket machines, more rolling-stock, a more efficient layout of platforms would all help to cope better with the throughput of passengers. The needs of the labour market are similar: ways of improving the structure of the market and making it work more efficiently.

Human beings, unfortunately, tend to respond to negative incentives — such as dismissal. (John P. Young, 1972)