The social opportunity cost of rural labour

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Abstract
Hodge I. (1982) The social opportunity cost of rural labour, Reg. Studies 16, 000-000. When new employment is generated in times of involuntary unemployment, the social opportunity cost of labour will be less than the market wage. In assessing the social value of projects it is therefore necessary to identify the extent of this differential. In this paper, an approach to the evaluation of the social opportunity cost of labour is described which models the process of labour adjustment subsequent to the creation of new vacancies. A Markov chain approach is adopted in order to quantify the impact on the labour force as the consequent changes work through the system and the opportunity cost of labour at various stages is measured on the basis of assumed productivities of employees in their alternative occupations. Finally, the impediments to this adjustment process in rural areas are discussed.