Public Cost-Benefit Valuation of Policy Regimes
Active labor market policy regimes incur heavy administrative costs for caseworkers and training programs, requiring comprehensive public finance accounting beyond simple benefit payout savings.
Picture this
Evaluating a company's safety equipment requires weighing the upfront purchase cost against prevented accident expenses and increased worker productivity, calculating the net money saved across the entire organization.
What the evidence says
The intensified activation policy regime generated a net societal economic value of €2,000 per exposed unemployed individual, excluding macro general equilibrium effects.
- Who
- N = 4,513 unemployed UI recipients (human, Denmark: Storstrøm and Southern Jutland counties).
- How
- Cost-benefit calculation incorporating detailed administrative intervention costs, reduced benefit payouts multiplied by tax distortion factors, and increased economic output value.
What to do
Perform comprehensive welfare cost-benefit analyses incorporating tax distortion multipliers and productivity output gains when evaluating administrative labor policy changes.
From the source
"They ignore general equilibrium effects, but find nevertheless that the programme has a value to society of €2000 per unemployed individual exposed to the intensive policy regime."
Experimental Evidence on the Nature of the Danish Employment Miracle
Tagged
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