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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, ON K7L3N6, Canada
    Cambridge Resources International Inc., Cambridge, MA 02141, USA)

  • Richard Sogah

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

  • Abdallah Othman

    (Cambridge Resources International Inc., Cambridge, MA 02141, USA)

  • Mikhail Miklyaev

    (Department of Economics, Queens University, Kingston, ON K7L3N6, Canada
    Cambridge Resources International Inc., Cambridge, MA 02141, USA)

  • Çağay Coşkuner

    (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 augmenting labour supply. These changes in employment have significant benefits and costs to both labour and society. However, the estimation of job creation benefits is complicated because of the large diversities in labour input. 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 (К ℓ ) for a wide range of labour types across a set of diverse situations and market conditions in Ghana. The paper adopts the relevant literature regarding the specifics of labour markets and the peculiarities of different labour types. Accordingly, the К ℓ 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 К ℓ , the conversion factor, as well as the labour externalities corresponding to the two types 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 & Çağay Coşkuner, 2023. "Estimation of the Economic Opportunity Cost of Labour: An Operational Guide for Ghana," Sustainability, MDPI, vol. 15(14), pages 1-21, July.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:14:p:11335-:d:1198823
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    References listed on IDEAS

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    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. Otoo, Kwabena Nyarko, 2019. "Informality and Labour Regulations in Ghana," Books, Rainer Hampp Verlag, number 9783957102522.
    7. 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).
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    9. 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.
    10. 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.
    11. 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..
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    15. 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.
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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:

    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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