Measuring The Social Opportunity Cost of Labor In Mexico

Guillermo-Peon Sylvia B. and Arnold Harberger ()
Additional contact information
Guillermo-Peon Sylvia B.: Benemerita Universidad Autonoma de Puebla

Journal of Benefit-Cost Analysis, 2012, vol. 3, issue 2, 41

Abstract: This paper reviews the theory underlying the concept of the social opportunity cost of labor (SOCL), as that concept is used in benefit-cost analysis and in applied welfare economics generally. It then presents in detail the procedures to be followed in estimating the SOCL in real-world cases. Important steps in data processing include calculating gross and net wages from data on “reported” wages. Further economic analysis involves taking account of migration patterns and of labor market duality. Estimates are made for 32 labor market areas in Mexico, covering 21 occupations for males and 19 for females.Our main results are a) that there are important differences between reported wages and the gross wages paid by employers, and also between both of these and the net wages received by workers, and b) that taking labor market duality into account leads to significant modifications of our SOCL estimates. More important, perhaps, than our specific estimates for Mexico, is the methodological framework that we use. This framework, based on the fundamental principles of applied welfare economics, can serve as a useful starting point for serious estimation of the SOCL for other countries.

Keywords: benefit-cost analysis; project evaluation; applied welfare economics; social opportunity cost of labor (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1515/2152-2812.1104 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:jbcacn:v:3:y:2012:i:2:n:1

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/jbca/html

DOI: 10.1515/2152-2812.1104

Access Statistics for this article

Journal of Benefit-Cost Analysis is currently edited by Glenn C. Blomquist and William H. Hoy

More articles in Journal of Benefit-Cost Analysis from De Gruyter
Bibliographic data for series maintained by Peter Golla ().