High measured unemployment, often accompanied by rapid wage and price increases, has plagued most Western nations in the 1970's. The aim of this paper is to appraise, albeit crudely, the contribution of three factors to these patterns in the Netherlands, Sweden, the United Kingdom, and the United States. These factors are: 1) insufficient aggregate demand, 2) structural imbalances in the composition of labor supplies and demands, and 3) changes in the relationship of measured unemployment to excess labor supply (referred to as the U-ES relationship). My main thesis is that measured unemployment bears a different relationship to real excess labor supply in the 1970's than it did in the 1960's, explaining much of the increase in measured unemployment from the 1960's to the 1970's.

Journal Article Common Property, Congestion, and Environmental Pollution Get access Robert H. Haveman Robert H. Haveman University of Wisconsin Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 87, Issue 2, May 1973, Pages 278–287, https://doi.org/10.2307/1882188 Published: 01 May 1973

This is a critique of the Arthur Maass article on Benefit Cost Analysis.

THIS COMMENT AND REPLY ARE BASED ON AN EARLIER PAPER IN WHICH THE AUTHOR CRITICIZED THE EXISTING PRACTICE OF BENEFIT-COST ANALYSIS WHICH ACCOUNTS FOR NATIONAL INCOME BENEFITS AND COSTS, BUT NOT FOR BENEFITS AND COSTS OF OTHER OBJECTIVES, SUCH AS REDISTRIBUTION OF NATIONAL INCOME TO ECONOMICALLY DEPRESSED REGIONS. HE PROPOSED STATUTORY ADOPTION OF CRITERIA FOR DESIGN AND EVALUATION OF PROJECTS WHICH WOULD COMBINE NATIONAL INCOME (EFFICIENCY) AND ONE OR MORE OTHER OBJECTIVES. IN THE COMMENT, IT IS ARGUED THAT IN SOME CASES REDISTRIBUTIONAL EFFECTS HAD BEEN ANALYZED IN SEVERAL STUDIES (IN WHICH IT WAS FOUND THAT THE NET REDISTRIBUTION WAS NOT IN THE 'RIGHT' DIRECTION), THAT COST- EFFECTIVENESS AND COST-BENEFIT ANALYSES WERE CONFUSED, AND THAT THE LEGISLATIVE PROPOSAL IS IMPRACTICAL BECAUSE OF THE NATURE OF CONGRESS. THE REPLY ARGUES THAT CONSIDERATION OF OF DISTRIBUTION EFFECTS IN THE PLANNING OF PROJECTS (RATHER THAN SIMPLY CALCULATING THE DISTRIBUTIONAL CONSEQUENCES OF PROJECTS THAT HAVE BEEN PLANNED FOR NATIONAL INCOME GAINS ALONE) WOULD LIKELY RESULT IN CHANGES IN BOTH THE PHYSICAL CHARACTERISTICS AND THE BENEFITS AND COSTS OF THE PROJECTS THEMSELVES, AND THAT THE APPARENT FAILURES OF CONGRESS WERE IN FACT DUE TO THE FAILURES OF EXECUTIVE DEPARTMENTS AND THE PRESIDENT. THE SPECIFIC EXAMPLES CITED CONCERN WATER RESOURCES. /BPR/

URING the past several years, substantial efforts seeking improvement in the design and economic evaluation of water resource (and other) public investments have been forthcoming.The issue in all of these analyses concerned both the nature of the appropriate investment criterion and the techniques for accurately estimating the parameters and variables which are its constituents.'While all of these contributions acknowledged the inadequacy or absence of market values in evaluating some benefits, generally all accepted the market prices of factors in computing the costs of project construction.2The primary rationale for this position rests on the proposition that, given full employment and factor markets which function as reasonably efficient allocative mechanisms, nominal factor prices reflect real cost and (social) worth.3However, even though most analysts have adopted the full-employment assumption in their own work, all have indicated the desirability of adjusting money costs so as to reflect more adequately true opportunity costs in a severe and widespread depression.4While the rationale for this position has varied among economists, essentially the same information is required to correct market costs, irrespective of viewpoint.For any particular project, knowledge is required of both the direct and indirect industrial and occupational demands imposed on the economy and the correspondence of the pattern of these demands with the pattern of unemployment and idle industrial capacity.Because of the magnitude of the empirical task of tracing these sectoral demands through several layers of transactions, appropriate cost adjustments have not, in practice, been made.Indeed, the impracticality of the empirical task may explain, as much as anything, the failure of the economics profession to choose the problem as a research undertaking.Recently, however, three basic empirical studies have been completed which enable the detailed tracing of public investment demands.In 1964, the Bureau of Labor Statistics released its study of the detailed on-site labor and materials reouirements of water resource

Robert Haveman, John Krutilla, Unemployment, Excess Capacity, and Benefit-Cost Investment Criteria: Some Supplementary Estimates, The Review of Economics and Statistics, Vol. 49, No. 4 (Nov., 1967), pp. 654-655