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Costing the Job Compact *
Author(s) -
PIGGOTT JOHN,
CHAPMAN BRUCE
Publication year - 1995
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1995.tb02677.x
Subject(s) - economics , activity based costing , unemployment , government (linguistics) , displacement (psychology) , public sector , balance (ability) , labour economics , public economics , econometrics , macroeconomics , accounting , economy , medicine , psychology , linguistics , philosophy , physical medicine and rehabilitation , psychotherapist
The budgetary cost of any government program should be measured by its impact on the public sector budget balance, over its effective timeframe. Typically, official cost estimates focus on the value of outlays only, and thus create a misleading impression of the opportunity cost of some policy initiatives . This paper offers estimates of the budgetary cost of the Job Compact, using a simple labour force transition flows model of unemployment. Deadweight, displacement and effectiveness impacts are explicitly addressed. We find that, depending on the values chosen for displacement and effectiveness parameters, budgetary cost can be greater or less than outlay estimates. However, for plausible values of these parameters, the budgetary cost is calculated to be substantially lower than official estimates, and may even be negative .