On the social opportunity cost of unemployment

Per-Olov Johansson and Bengt Kriström

Journal of Economic Policy Reform, 2022, vol. 25, issue 3, 229-239

Abstract: The handling of unemployment is a central issue in cost–benefit analysis. Typically, the shadow price of employing an unemployed is derived by considering a marginal change in the employment constraint faced by an unemployed or rather an underemployed. In contrast, in this paper, we consider the discrete shift from unemployment to (full) employment. The result provides guidance how to estimate the social cost of recruiting otherwise unemployed to a project. It is shown that the social cost is overestimated by using the private reservation wage. The common practice of adding different cost items is shown to be flawed.

Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/17487870.2020.1785300 (text/html)
Access to full text is restricted to subscribers.

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:taf:jpolrf:v:25:y:2022:i:3:p:229-239

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/GPRE19

DOI: 10.1080/17487870.2020.1785300

Access Statistics for this article

Journal of Economic Policy Reform is currently edited by Dr Judith Clifton

More articles in Journal of Economic Policy Reform from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().