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Vol. 82, No. 2
Posted 2000-03-01

The Revealed Cost of Unemployment

by Stratford Douglas and Howard J. Wall

The costs of unemployment usually are stated in terms of the amount of aggregate income that is foregone because of resources left idle. Although useful, this method does not provide all of the information necessary for normative analysis. In this article, the authors propose an alternative that measures the cost of regional and national unemployment by the amount that people would be willing to pay to avoid it. The authors’ model treats unemployment as a region-specific disamenity, and uses regional cross-migration data to reveal preferences towards income and unemployment.

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