Question

Discuss the effects of public expenditure on employment.

Answer 1

1. Direct Employment: Government projects (like building roads, schools, or hospitals) create direct job opportunities in the public and private sectors.
2. Indirect Employment: Increased demand for materials and services leads to job creation in related industries (multiplier effect).

3. Support to Labour-Intensive Sectors: Government subsidies and investments in agriculture, small-scale industries, and rural development create employment in labour-intensive areas.

4. Welfare and Employment Schemes: Public expenditure on programmes like MGNREGA (in India) provides guaranteed employment to rural workers, helping reduce unemployment and underemployment.

5. Skill Development and Human Capital: Expenditure on education, training, and healthcare improves the quality of the labour force, making them more employable in the long run.