A ROADMAP TO FULL EMPLOYMENT AND PRICE STABILITY IN DEVELOPING COUNTRIES: THE CASE OF TUNISIA

The purpose of this study is to establish the feasibility of full employment and price stability in Tunisia via an Employer of Last Resort (ELR) program. The development of Tunisian political economy since independence is analyzed in order to identify the country’s institutional characteristics that have determined the context for its current economic conditions of high and persistent levels of unemployment despite relatively stable macroeconomic conditions. Using the theory of institutional adjustment, a three-phase ELR plan is proposed to be gradually implemented over a six-year period. The proposed strategy aims at making use of the country’s extensive Solidarity Network infrastructure to implement full employment. The cost estimates for the program reveal that ELR is affordable and highly beneficial for Tunisia, although it requires a comprehensive policy agenda in order to ensure its success.