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Estimation of the Economic Opportunity Cost of Labour: An Operational Guide for Ghana

Author

Listed:
  • Glenn P. Jenkins

    (Department of Economics, Queens University, Kingston, Ontario, Canada and Cyprus International University, North Cyprus)

  • Richard Sogah

    (Department of Economics, Eastern Mediterranean University, Gazimagusa 99628, Turkey)

  • Abdallah Othman

    (Cambridge Resources International Inc.)

  • Mikhail Miklyaev

    (Department of Economics Queen’s University Canada and Cambridge Resources International Inc.)

  • Çagay Coskuner

    (Department of Economics, Eastern Mediterranean University, Gazimagusa 99628, Turkey)

Abstract
The implementation of projects often affects employment through direct job creation, indirectly stimulating employment, or increasing labour force participation. These changes in employment have significant benefits and costs to both labour and society. However, the estimation of job creation benefits is challenging because of the large diversities in labour inputs. We attempt to address this issue by using the supply price approach to develop an analytical framework based on sound microeconomic principles to assist project analysts to arrive at justifiable empirical estimates of the economic opportunity cost of labour for a wide range of labour types across a set of diverse situations and market conditions in Ghana. Accordingly, the economic opportunity cost of labour will vary by skill, location, and labour market conditions that need to be incorporated into its estimation. In this analysis, the estimation has been carried out to quantify the economic opportunity cost of labour, as well as the labour externalities corresponding to the two broad categories of labour: skilled and unskilled. Similarly, these estimates refer to groups of labour according to areas of residence: rural and urban.

Suggested Citation

  • Glenn P. Jenkins & Richard Sogah & Abdallah Othman & Mikhail Miklyaev & Çagay Coskuner, 2023. "Estimation of the Economic Opportunity Cost of Labour: An Operational Guide for Ghana," Development Discussion Papers 2023-09, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:4608
    as

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    References listed on IDEAS

    as
    1. repec:pri:cepsud:215krueger is not listed on IDEAS
    2. Jenkins, Glenn P & Montmarquette, Claude, 1979. "Estimating the Private and Social Opportunity Cost of Displaced Workers," The Review of Economics and Statistics, MIT Press, vol. 61(3), pages 342-353, August.
    3. Michaud, Pierre-Carl & Vencatachellum, Desire, 2003. "Human Capital Externalities in South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 51(3), pages 603-628, April.
    4. Glenn Jenkins, 1995. "Economic Opportunity Cost Of Labour: A Synthesis," Development Discussion Papers 1995-02, JDI Executive Programs.
    5. Greenberg, David H. & Robins, Philip K., 2008. "Incorporating nonmarket time into benefit-cost analyses of social programs: An application to the self-sufficiency project," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 766-794, April.
    6. Barry T. Hirsch & Bruce E. Kaufman & Tetyana Zelenska, 2015. "Minimum Wage Channels of Adjustment," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(2), pages 199-239, April.
    7. Nxumalo, Mpumelelo Author-Name: Raju, Dhushyanth, "undated". "Structural Transformation and Labor Market Performance in Ghana," Jobs Group Papers, Notes, and Guides 154568, The World Bank.
    8. Alan B. Krueger & Andreas Mueller, 2011. "Job Search and Job Finding in a Period of Mass Unemployment: Evidence from High-Frequency Longitudinal Data," Working Papers 1295, Princeton University, Department of Economics, Center for Economic Policy Studies..
    9. George J. Borjas, 2021. "Self-Selection and the Earnings of Immigrants," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 4, pages 69-91, World Scientific Publishing Co. Pte. Ltd..
    10. Mike Brewer & Marco Francesconi & Paul Gregg & Jeffrey Grogger, 2009. "Feature: In‐work Benefit Reform in a Cross‐National Perspective ‐ Introduction," Economic Journal, Royal Economic Society, vol. 119(535), pages 1-14, February.
    11. Hasan Ali Biçak & Glenn P. Jenkins & Chun-Yan Kuo & M Benjamin Mphahlele, 2004. "An Operational Guide to The Estimation Of The Economic Opportunity Cost Of Labour In South Africa," Development Discussion Papers 2004-08, JDI Executive Programs.
    12. Otoo, Kwabena Nyarko, 2019. "Informality and Labour Regulations in Ghana," Books, Rainer Hampp Verlag, number 9783957102522.
    13. Krueger, Alan B. & Mueller, Andreas I., 2011. "Job Search and Job Finding in a Period of Mass Unemployment: Evidence from High-Frequency Longitudinal Data," IZA Discussion Papers 5450, Institute of Labor Economics (IZA).
    14. Hasan Ali Bicak & Glenn P Jenkins & Chun‐Yan Kuo & M Benjamin Mphahlele, 2004. "An Operational Guide To The Estimation Of The Economic Opportunity Cost Of Labour In South Africa1," South African Journal of Economics, Economic Society of South Africa, vol. 72(5), pages 1057-1068, December.
    15. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Ghana; job creation; economic cost; supply price; informal labour; formal labour; labour externality;
    All these keywords.

    JEL classification:

    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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