Cost Benefit Analysis of a Transport Improvement in the Case of Search Unemployment
AbstractWe examine the implications of search unemployment for the evaluation of a transport investment in a conventional cost benefit analysis (CBA) assuming perfect competition. Lower transport costs induce search over a larger area and longer commuting distances. The expected duration of vacancies is reduced with ensuing benefits outweighing the loss to increased transport. The search imperfection drives a wedge between the marginal product of labour and the wage, such that the final benefits of a transport improvement exceed those of a conventional CBA. Using a simulation model we find these additional benefits may be substantial. © 2008 LSE and the University of Bath
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Bibliographic InfoArticle provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy.
Volume (Year): 42 (2008)
Issue (Month): 1 (January)
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Web page: http://www.bath.ac.uk/e-journals/jtep
Other versions of this item:
- Pilegaard, Ninette & Fosgerau, Mogens, 2008. "Cost benefit-analysis of a transport improvement in the case of search unemployment," MPRA Paper 10037, University Library of Munich, Germany.
- R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
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