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Estimating Shadow Wage Rates for Economic Project Appraisal

Author

Listed:
  • Iraj Saleh

    (Department of Agricultural Economics, Tehran University, Karaj, Iran.)

Abstract

One of the central concerns in cost benefit analysis is the adjustment of distortions in markets to provide a better guide to a more effective allocation of scarce resources. The objectives of this paper are to develop a model for the estimation of the shadow wage rate (SWR) for groups of occupations and to estimate the SWRs for the major groups of occupations in Australia. The main findings of the analysis indicate that estimated SWRs for major groups of occupations are different from the corresponding market wage rates, and that estimated SWRs of the groups are different. The results of the study demonstrate the importance of estimation of the SWR as a part of the appraisal process of investment projects. The ratio analysis indicates the significance of the difference between SWR and market wage rate, which is recommended to be adjusted is economic analysis of projects.

Suggested Citation

  • Iraj Saleh, 2004. "Estimating Shadow Wage Rates for Economic Project Appraisal," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(3), pages 253-266.
    • Handle: RePEc:pid:journl:v:43:y:2004:i:3:p:253-266
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    File URL: http://www.pide.org.pk/pdf/PDR/2004/Iraj%20Saleh.pdf
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    References listed on IDEAS

    as
    1. Lal, Deepak, 1973. "Disutility of Effort, Migration, and the Shadow Wage-rate," Oxford Economic Papers, Oxford University Press, vol. 25(1), pages 112-126, March.
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    Cited by:

    1. Ugwoke, B. & Sulemanu, S. & Corgnati, S.P. & Leone, P. & Pearce, J.M., 2021. "Demonstration of the integrated rural energy planning framework for sustainable energy development in low-income countries: Case studies of rural communities in Nigeria," Renewable and Sustainable Energy Reviews, Elsevier, vol. 144(C).
    2. Harald Lang & Armin-D. Riess, 2019. "Shadow wages in cost-benefit rules for project and policy analyses: estimates for OECD countries," DEM Discussion Paper Series 19-05, Department of Economics at the University of Luxembourg.

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    More about this item

    Keywords

    Wages; Shadow Prices; Economic Projects;
    All these keywords.

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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