Measuring Jobs-Linked Externalities in Private Investment Projects: A Fragility, Conflict, and Violence Perspective

Federica Ricaldi and Peter Mousley

No 32099371, Jobs Group Papers, Notes, and Guides from The World Bank

Abstract: This paper presents the rationale, the methodology and the results of the application of an innovative social rate of return (SRR) methodology in the context of an investment project (Gaza Solar Power project) financed through the Finance for Jobs (F4J) Series of Projects (SOP) in West Bank and Gaza. A key assumption behind this work is that creating jobs through private sector investment generates benefits above the market returns to the factors of production (capital, labor, and land). Moreover, in instances where the market returns would not be sufficient for the investment to take place because of elevated risks and market failures, these benefits constitute additional social returns that can justify and merit public financing support to enable fundamentally sound commercial investment to proceed and the benefits to be generated. The paper presents the methodology applied through the use of discrete choice experiment (DCE) in a cost-benefit analysis to better approximate a measurable social value to the benefits (jobs-linked externalities) generated by the investment project in Gaza.

Keywords: opportunity cost; united states agency for international development; Fragility, Conflict, and Violence; Economic Opportunity Cost of Capital; access to international capital markets; Let's Work Partnership; social rate of return; Internal rate of return; Job Creation; discounted cash flow analysis; social safety net system; marginal product of labor; acceptable rate of return; private sector job creation; financing need; reliability of energy supply; time value of money; contingent valuation technique; social cost-benefit analysis; lack of control; factor of production; cost of labor; amount of investment; innovative financial product; unpaid family worker; financial sector specialist; future cash flow; value of good; measure of preferences; labor market structure; rent-seeking behavior; personal income tax; private sector player; constraints to growth; low female participation; returns to capital; human capital accumulation; health and nutrition; Early Childhood Development; Poverty & Inequality; benefit to society; social opportunity costs; senior operations; measurement of benefits; labor market policy; price of labor; children's nutritional status; solar power capacity; prices of input; number of jobs; effect of externality; rates of unemployment; repatriation of capital; real estate developer; demand for electricity; effects of unemployment; education and health; privileges and immunity; labor productivity growth; provision of power; investments in infrastructure; private sector party; social protection policy; movement of labor; generation of electricity; allocation of resource; access to material; high unemployment rate; social return; private investment; social externalities; financial cost; public financing; market wage; institutional failure; new job; private investor; market failure; performance criteria; social value; discount rate (search for similar items in EconPapers)
Pages: 42
Date: 2019-01-01
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Citations: View citations in EconPapers (1)

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