Cost Benefit Analysis of Labor Allocation and Training Schemes

Caravani, P., La Bella, A., & Paoluzzi, A. (1980). Cost Benefit Analysis of Labor Allocation and Training Schemes. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-80-032

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Abstract

Discrepancies in local labor markets occur as unsatisfactory matching of skill within the same region as well as redundant supply and unsatiated demand among regions. Some of this discrepancy could -- in principle -- be removed by letting supply in one region meet demand in another. A reallocation policy of this kind poses a few questions of prominent concern: 1. Can economic disvalue arising from imperfection of labor markets at a regional level be mathematically assessed? 2. Is it possible to define a regional measure of inefficiency on both sides -- demand and supply -- of the labor market? 3. How should vacancies be distributed over skill and space to alleviate inefficiency? These questions are investigated in this paper and a short-run solution is obtained via the primal-dual linear programming formulation of the problem.

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