IDEAS home Printed from https://ideas.repec.org/p/qed/dpaper/4515.html
   My bibliography  Save this paper

Estimation of the Economic Opportunity Cost of Labor: An Operational Guide for Mozambique

Author

Listed:
  • Glenn P. Jenkins

    () (Department of Economics, Queen's University, Kingston, Canada and Eastern Mediterranean University, North Cyprus)

  • Pejman Bahramain

    () (Postdoctoral Fellow, JDINT’L Executive Programs,Department of Economics, Queen’s University Kingston, Ontario, Canada, K7L3N6)

  • Mikhail Miklyaev

    () (JDINT’L Executive Programs,Department of Economics, Queen’s University Kingston, Ontario, Canada, K7L3N6, and Senior Associate/ Economist Cambridge Resources International Inc.)

Abstract

Using the supply price approach, the economic opportunity cost of labor (EOCL) was estimated for a number of labor market situation in Mozambique. The (EOCL) varies by skill, location, and labor market. The approach presented in this paper incorporates these factors in the estimation process. Due to the influence of diverse labour market conditions at the time of project implementation one is not able to provide a single estimate of the EOCL that can be used in the evaluation of all projects. Instead our objective is to develop an operational framework with examples that will serve as a guide for the estimation of the EOCLs across a range of circumstances typical to Mozambique. Our findings indicate that the range of the EOCL in Mozambique can vary from near equality with the project wage for unskilled workers to about 63% of the project wage for foreign-sourced skilled workers. These rates depend heavily on location and on the highly-differentiated skills of the labor employed and, most importantly, the wage paid by the project relative to the minimum wage required (the supply price) to attract sufficient workers with the required skills. Similarly, the consideration of the international mobility of workers further enriches this analysis.

Suggested Citation

  • Glenn P. Jenkins & Pejman Bahramain & Mikhail Miklyaev, 2019. "Estimation of the Economic Opportunity Cost of Labor: An Operational Guide for Mozambique," Development Discussion Papers 2019-04, JDI Executive Programs.
  • Handle: RePEc:qed:dpaper:4515
    as

    Download full text from publisher

    File URL: http://cri-world.com/publications/qed_dp_4515.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Michaud, Pierre-Carl & Vencatachellum, Desire, 2003. "Human Capital Externalities in South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 51(3), pages 603-628, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Economic Cost; Labor; Supply Price; Protected Wage; Investment Appraisal;

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qed:dpaper:4515. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock). General contact details of provider: http://edirc.repec.org/data/qedquca.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.