Cost benefit-analysis of a transport improvement in the case of search unemployment

Ninette Pilegaard and Mogens Fosgerau

MPRA Paper from University Library of Munich, Germany

Abstract: We examine the implications of search unemployment for the evaluation of a transport in-vestment in a conventional cost benefit analysis (CBA) assuming perfect competition. Lower transport costs induces search over a larger area and longer commuting distances. The ex-pected duration of vacancies is reduced with ensuing benefits outweighing the loss to in-creased 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 sub-stantial.

Keywords: Cost-benefit; transport; search unemployment; welfare (search for similar items in EconPapers)
JEL-codes: R42 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-geo, nep-lab and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:10037

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