An Empirical Estimate of the Labor Response Function for Benefit-Cost Analysis
Since the seminal contribution of Haveman and Krutilla(1968), the subject of the potential drawdown from the pool of unemployed versus diversion of labor from existing employments consequent upon a public investment project has been largely neglected in the BCA literature. The advent of a new BLS series on job vacancies now permits direct estimation of the crucial unemployment-vacancies (U-V) relationship, as compared to the ad hoc sine function using the unemployment rate assumed by Haveman and Krutilla. The probability p of a worker being drawn from the pool of unemployed is recast as a function of the job vacancy rate (vacancies/labor force) and shows higher values than Haveman and Krutilla at comparable rates of unemployment. At the height of the 2008-09 Great Recession, about half of Stimulus induced jobs were drawn from the pool of unemployed.
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Volume (Year): 3 (2012)
Issue (Month): 3 (August)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Haveman Robert H. & Farrow Scott, 2011.
"Labor Expenditures and Benefit-Cost Accounting in Times of Unemployment,"
Journal of Benefit-Cost Analysis,
De Gruyter, vol. 2(2), pages 1-9, April.
- Haveman, Robert H. & Farrow, Scott, 2011. "Labor Expenditures and Benefit-Cost Accounting in Times of Unemployment," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 2(02), pages 1-9, April.
- Gadi Barlevy, 2011. "Evaluating the role of labor market mismatch in rising unemployment," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q III, pages 82-96.
- Richard O. Zerbe Jr & Allen S. Bellas, 2006. "A Primer for Benefit–Cost Analysis," Books, Edward Elgar Publishing, number 3480.
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