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Economic Analysis of Jobs Investments Project

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  • Robalino, David A.
  • Walker, David Ian

Abstract

This Note systematizes the economic evaluation of Jobs Investment Projects. It explains the limitations of past approaches that have regarded jobs only as a by-product of growth. It focuses on market failures that create a gap between the social and private return on investments and reduce the number of good jobs below the socially optimal level. Two of these market failures are: labor externalities arising from the divergence between the market price and opportunity cost of labor; and social jobs externalities linked to improved jobs outcomes for groups such as youth, women, and the extreme poor. These externalities can amplify other market failures such as learning spillovers and coordination failures. The analysis is integrated within a Cost-Benefit framework, to facilitate decision making around jobs investment programs. The Note discusses applications to different sorts of projects: those that focus on improving the labor supply and labor market matches; those that focus on strengthening firms' demand for labor; and integrated projects, that include both types of interventions.

Suggested Citation

  • Robalino, David A. & Walker, David Ian, 2017. "Economic Analysis of Jobs Investments Project," Jobs Group Papers, Notes, and Guides 27936461, The World Bank.
    • Handle: RePEc:wbk:jbsgrp:27936461
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    Keywords

    paper issue; Economic Opportunity Cost of Capital; trade and competitiveness; capital investment need; social rate of return; Internal rate of return; access to financial service; labor force survey data; active labor market program; operation and maintenance cost; Active Labor Market Policies; active labor market policy; optimal portfolio of investment; demand for labor; cost benefit analysis; return on investment; number of jobs; business plan competition; market failure; social opportunity costs; Production Possibility Frontier; Job Creation; quality of employment; labor market intermediation; jobs and growth; solar power plant; local labor market; theory of change; support for investment; flow of revenue; quality employment; years of schooling; learning by doing; social insurance coverage; foreign exchange use; price of labor; quality of job; business support service; average unemployment rate; social sector investment; life of others; number of workers; cost of labor; patterns of investment; high productivity jobs; socially optimal level; privileges and immunity; allocation of investment; gender and skills; amount of investment; labor productivity growth; returns to capital; class of people; reallocation of resource; problems of gender; expansion of demand; full time employment; investments in infrastructure; amount of tax; lack of demand; crime and violence; differences in earnings; innovation and growth; rates of return; shadow wage rate; labor market outcome; Local Economic Development; benefits to workers; Early Childhood Development; health and nutrition; human capital accumulation; net cash flow; prices of input; social externalities; benefit stream; supply side; market price; labor supply; private investment; economic appraisal; demand curve; shadow price; private investor; private rate; investment program; benchmark rate; social cohesion; Capital Investments; sensitivity analysis; future earnings; modern sector; financial analysis; firm level; market wage; reveal preference; young men; gap financing; general equilibrium; young woman; market cost; financial rate; matching grant; financial cost; public policy; positive impact; capital grant; road infrastructure; productive capacity; knowledge spillover; household investment; young people; present value; investment lending; private return; youth employment; youth unemployment; private gain; public good; supply curve; multiplier effect; analytical tool; public support; government failure; reasonable assumption; Macroeconomic Stability; public intervention; job impact; Informal Jobs; projects lead; SME financing; information asymmetry; job opportunity; job-search assistance; agricultural sector; promotion effort; transport subsidy; independent variable; wage subsidy; beneficiary population; project intervention; resource mobilization; net earning; unemployed people; technological frontier; project rules; path dependence; private benefit; regulatory failure; public resource; skill acquisition; wage level; original work; production capacity; sole responsibility; copyright owner; market mechanism; transactions cost; social stability; policy preference; job opportunities; working condition; net output; formal sector; future employment; rural region; employment indicator; industrial park; expansion plan; vulnerable worker; capital use; poverty trap; infrastructure service; Social Protection; program performance; earnings improvement; labour market; Learning and Innovation Credit; population group; improving infrastructure; project costing; allocative efficiency; measurement technique; financial projection; market revenue; traditional sector; public equity; labor resource; income stream; market linkage; Public Infrastructure; increasing investment; vulnerable group; sole source; production possibilities; commercial purpose; absorptive capacity; investment amount; infrastructure intervention; social group; effect estimate; complementary activities; comprehensive treatment; poverty dynamic; computing skill; crowding out; Fiscal Sustainability; incentive system; causal link; labor outcomes; intermediate consumption; discount rate; cost stream; full employment; demand growth; young child;
    All these keywords.

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