On Measuring the Social Opportunity Cost of Permanent and Temporary Employment: A Reply

Glenn Jenkins () and Chun-Yan Kuo ()
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Chun-Yan Kuo: Senior Fellow, John Deutsch International, Department of Economics, Queen’s University, Canada

No 1981-11, Development Discussion Papers from JDI Executive Programs

Abstract: Two major points were raised in this Journal by DeWolf and Sugden (1979) in their comment on our paper (1978) concerning the measurement of the opportunity costs of permanent and temporary employment. Clarification of these issues and their implications is central to the estimation of the social opportunity cost (soc) of labour and its application in the evaluation of public sector sponsored investments. First, DeWolf and Sugden contend that the labour market in Cape Breton during 1972-4 could not be in long-run equilibrium with other labour markets in Canada when the proportion of time spent unemployed in the temporary sector was on average as high as 46 per cent, and the soc of temporary jobs created in the project should not be greater than the market wage rate. Secondly, they argue that the migration response to either the creation of jobs by a project or the displacement of workers at a firm would not be rapid or large enough to bring about a return to the initial equilibrium in the labour market within a relevant length of time.

Keywords: : Social Opportunity Cost; Employment; labour (search for similar items in EconPapers)
JEL-codes: J0 (search for similar items in EconPapers)
Pages: 6 pages
Date: 1981-11
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