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


  • David H. Greenberg


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.

Suggested Citation

  • David H. Greenberg, 1997. "The Leisure Bias in Cost-Benefit Analyses of Employment and Training Programs," Journal of Human Resources, University of Wisconsin Press, vol. 32(2), pages 413-439.
  • Handle: RePEc:uwp:jhriss:v:32:y:1997:i:2:p:413-439

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    References listed on IDEAS

    1. Katharine G. Abraham & Susan N. Houseman, 1993. "Job Security in America: Lessons from Germany," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number kagsnh1993, November.
    2. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
    3. Behrman, Jere & Tarbman, Paul, 1985. "Intergenerational Earnings Mobility in the United States: Some Estimates and a Test of Becker's Intergenerational Endowments Model," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 144-151, February.
    4. Peters, H Elizabeth, 1992. "Patterns of Intergenerational Mobility in Income and Earnings," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 456-466, August.
    5. Joseph G. Altonji & Thomas A. Dunn, 2000. "An Intergenerational Model of Wages, Hours, and Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 35(2), pages 221-258.
    6. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
    7. Zimmerman, David J, 1992. "Regression toward Mediocrity in Economic Stature," American Economic Review, American Economic Association, vol. 82(3), pages 409-429, June.
    8. Solon, Gary, 1989. "Biases in the Estimation of Intergenerational Earnings Correlations," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 172-174, February.
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    Cited by:

    1. 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.
    2. Jespersen, Svend T. & Munch, Jakob R. & Skipper, Lars, 2008. "Costs and benefits of Danish active labour market programmes," Labour Economics, Elsevier, vol. 15(5), pages 859-884, October.
    3. Dehejia, Rajeev H., 2005. "Program evaluation as a decision problem," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 141-173.
    4. 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, vol. 37(C), pages 31-42.
    5. Greenberg, David H. & Deitch, Victoria & Hamilton, Gayle, 2010. "A Synthesis of Random Assignment Benefit-Cost Studies of Welfare-to-Work Programs," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 1(01), pages 1-30, July.
    6. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
    7. Sheena McConnell & Steven Glazerman, 2001. "National Job Corps Study: The Benefits and Costs of Job Corps," Mathematica Policy Research Reports 19ff8678a108410587c5dfad0, Mathematica Policy Research.

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