Page 43 - Azerbaijan State University of Economics

Vilayat İsmayilov, Nahid Almasov, Sarraf Mirzayev:The Programme of Reduction and
Profilling of Long-Term Unemployment in Azerbaijan

Studies on absolute poverty note that the World Bank estimates that absolute
poverty in Asia and Africa in 1980 was 50-60% of the total population and was
negligible in developed countries; also, it is doubtful whether Asia has always been
so poor. The history of poverty in developed countries is compared. Looking at
poverty measurement methodologies, it is argued that a needs-based approach is the
best way to address the problem of measuring poverty in the past [Allen, R. S.,
2020]. Researchers analyzed the increase in household indebtedness from the point
of view of its causes and long-term macroeconomic consequences. The analysis
focuses on the American case. In contrast to life-cycle interpretations of this
phenomenon and interpretations in terms of unstable deviations of current income
flows from their long-term trend, the growth of household debt is seen as the result
of constant changes in income distribution and growing income inequality. Thanks
to household debt, low wages seem to co-exist with relatively high aggregate
demand, thus resolving the contradiction between the need for high and rising levels
of consumption to increase the actual output of the system and the framework of
antagonistic distribution conditions that keep the real incomes of the vast majority of
society within limits [Barba A. and Pivetti M., 2009]. Variations in wages play a
one-sided role in industrial capitalism. Higher wages mean higher production costs,
but while they provide greater purchasing power for workers, they also stimulate
demand, which plays a contradictory role as the main element of (variable)
production costs and as the main source of demand. wage movements have a
complex, even ambiguous, impact on employment and production. This explains the
existence of controversial views on the relationship between wages and
unemployment and, at the same time, provides an economic basis for supporting
various political ideologies regarding the management of the capitalist economy.
Based on the study, the authors tried to develop a macroeconomic model in which
the question of the ratio of wages and unemployment can be analyzed in relation to
these controversial political ideologies [Bhaduri A., Marglin S., 1990]. The
theoretical consequences of another aspect of institutional mechanisms are the
relations and destruction of the "Golden age”- the relationship between capital and
labor, as well as the organization of the labor process, which was considered in the
works of researchers. It combines a Marxist understanding of the importance of the
labor process with modern macroeconomic analysis. He explains that the role of the
"labor extraction function" is similar to the "investment function" in more traditional
Keynesian analysis [Bowles S., Boyer R., 1995].

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