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

David Greenberg

Journal of Human Resources, 1997, vol. 32, issue 2, 413-439

Abstract: 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.

Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:32:y:1997:i:2:p:413-439

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