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The Leisure Bias in Cost-Benefit Analyses of Employment and Training Programs

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  • David H. Greenberg
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    Abstract

    Although increases in earnings that result from Employment and Training (E&T) programs typically come at the cost of losses of leisure to participants, this is almost never taken into account in cost-benefit analyses of E&T programs. This paper develops a method for adjusting for this bias and illustrates how the method can be used to reassess findings from earlier E&T cost-benefit analyses. Results in the paper suggest that the bias from ignoring lost leisure is likely to be sizable unless the E&T program that is subject to cost-benefit analysis increases earnings mainly by raising wage rates or participant reservation wages are near zero. Ignoring the bias will favor E&T programs that emphasize increases in hours of work by focusing on job search or work requirements at the expense of programs that increase wage rates through investments in human capital.

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    Bibliographic Info

    Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

    Volume (Year): 32 (1997)
    Issue (Month): 2 ()
    Pages: 413-439

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    Handle: RePEc:uwp:jhriss:v:32:y:1997:i:2:p:413-439

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    Web page: http://jhr.uwpress.org/

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    Cited by:
    1. Rajeev Dehejia, 1999. "Program Evaluation as a Decision Problem," NBER Working Papers 6954, National Bureau of Economic Research, Inc.
    2. Thakuriah (Vonu), Piyushimita & Persky, Joseph & Soot, Siim & Sriraj, P.S., 2013. "Costs and benefits of employment transportation for low-wage workers: An assessment of job access public transportation services," Evaluation and Program Planning, Elsevier, Elsevier, vol. 37(C), pages 31-42.
    3. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
    4. Jespersen, Svend T. & Munch, Jakob R. & Skipper, Lars, 2008. "Costs and benefits of Danish active labour market programmes," Labour Economics, Elsevier, Elsevier, vol. 15(5), pages 859-884, October.

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