Including Jobs in Benefit-Cost Analysis
AbstractPublic policies may affect employment by directly creating jobs or facilitating job creation. In labor markets with high unemployment, such employment changes may have significant net efficiency benefits, which should be included in benefit-cost analyses. The research literature offers diverse recommendations on measuring employment benefits. Many of the recommendations rely on arbitrary assumptions. The resulting employment benefit estimates vary widely. This article reviews this literature and offers recommendations on how to better measure employment benefits using estimable parameters. Guidance is provided on measuring policy-induced labor demand, estimating the demand shock's impact on labor market outcomes, and translating labor market impacts into efficiency benefits. Two measures are proposed for efficiency benefits, one relying on adjusted reservation wage gains and the other relying on adjusted earnings gains.
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Bibliographic InfoArticle provided by Annual Reviews in its journal Annual Review of Resource Economics.
Volume (Year): 4 (2012)
Issue (Month): 1 (08)
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Other versions of this item:
- Timothy J. Barik, . "Including Jobs in Benefit-Cost Analysis," Upjohn Working Papers and Journal Articles tjb2012arre, W.E. Upjohn Institute for Employment Research.
- Timothy J. Bartik, 2011. "Including Jobs in Benefit-Cost Analysis," Upjohn Working Papers and Journal Articles 11-178, W.E. Upjohn Institute for Employment Research.
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
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- Carolyn Fischer & Garth Heutel, 2013.
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- Scott Farrow, 2014. "Residual Risk Accounting: A Pilot Study of the Coastal Sector," UMBC Economics Department Working Papers 14-01, UMBC Department of Economics.
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