Cost benefit analysis of a transport improvement in the case of search unemployment

Publikation: Bidrag til tidsskriftTidsskriftartikelfagfællebedømt

We examine the implications of search unemployment for the evaluation of a transport investment in a conventional cost benefit analysis (CBA) assuming perfect competition. Lower transport costs induce search over a larger area and longer commuting distances. The expected duration of vacancies is reduced with ensuing benefits outweighing the loss to increased transport. The search imperfection drives a wedge between the marginal product of labour and the wage, such that the final benefits of a transport improvement exceed those of a conventional CBA. Using a simulation model we find these additional benefits may be substantial.

OriginalsprogEngelsk
TidsskriftJournal of Transport Economics and Policy
Vol/bind42
Udgave nummer1
Sider (fra-til)23-42
Antal sider20
ISSN0022-5258
StatusUdgivet - jan. 2008

ID: 181872848